Institutions on the hunt as manager searches increased in 2010

Magnifying_glassInstitutional investors conducted more manager searches in 2010 than 2009, with increased interest in emerging markets and alternatives. But global equity remained the most popular asset class.

A report by investment consultant Mercer found that during 2010, their clients conducted 940 searches globally, which represented an increase of 14% from 826 in 2009.

The 2010 searches represented US$95.6bn (€67.4bn) in assets placed by 361 institutional investors.  The consultant found that global equity was still the most popular search category, with 177 searches carried out in 2010. However, more assets were placed in global fixed income -$13.5bn compared to $11.2bn in global equity.

Emerging market searches, both in equity and debt, saw a substantial increase, said Mercer, reflecting investors’ desire to capture the strong economic growth in some Asian and other developing economies. The research found that emerging market equity searches rose from 21 in 2009 to 50 in 2010 and emerging market debt searches increased from 4 to 45.

Mercer also said that interest in property rebounded significantly last year with 72 searches compared to 67 in 2009. The firm also evidenced a growing interest in commodities among its clients, with an increase of 13 searches to a total of 20 from a measly 7 the year before.

Andy Barber, global director of manager research at Mercer, said: “Interest in non-traditional asset classes continues to grow as investors look to increase diversification and take advantage of perceived attractive beta and alpha generation opportunities. The trend away from traditional investment began some time ago and while events such as the global financial crisis led to a slowing of the trend, it is one we expect to continue. That said, traditional equity and bond mandates are likely to remain the dominant areas of search activity for the foreseeable future.”

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