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Alternative ‘wall of money’ not seen – Mercer

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GLOBAL – Mercer Investment Consulting says the predicted “wall of money” into alternative assets such as hedge funds has not materialised – in part due to the lack of transparency, costs and governance problems.

“Undoubtedly, the use of alternatives by pension plans has increased in most parts of the world but the predicted ‘wall of money’ has yet to manifest itself,” the consulting firm said in an investment update for Irish clients.

“In part this is because pension plans recognise that the best time to sell equities may not be when the market has just fallen and, in part, because of the lack of transparency, the higher cost and the governance problems that alternatives pose.”

“In our view, some alternatives will provide a worthwhile alternative source of alpha excess_return and some will provide worthwhile diversification.

“However, not every plan will benefit from investment to alternatives. Any decision to invest in alternatives must be based on a plan’s own unique circumstances.”

Mercer Human Resource Consulting yesterday named Patrick Cosgrave as head of its pensions administration practice, taking over from Paul Couchman.

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