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Manager search study shows global shift towards non-traditional mandates

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Manager search asset volumes around the world grew last year, and the pattern of activity reflected a shift towards non-traditional mandates, according to a study by Mercer.

The consultancy said its 2013 global manager search trends report showed fixed income search activity had continued to move away from government and credit-benchmarked mandates.

The survey, based on activity reported through Mercer’s client base internationally, revealed the number of searches had grown between 2012 and 2013 in the UK, the rest of Europe and Asia, but had decreased in Australasia and North America.

However, across these regions as a whole, the value of assets placed increased markedly, it said.

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Altogether, the consultancy undertook 760 searches last year globally, down from 776 in 2012.

Deb Clarke, global head of investment research at Mercer, said: “The trend away from traditional asset classes observed in recent years continues, driven mainly by investors seeking to diversify their growth portfolios and ensure they incorporate multiple return drivers.”

She said investors were continuing to raise their allocations to global strategies, as well as to more diverse mandates, including investment in diversified growth funds and alternative assets.

The firm said demand for multi-asset strategies was still strong, and that the number of searches in this area had risen by more than a third during the year. 

These searches were mainly in the UK and the US, but also seen in several other regions, it said.

In the UK, the number of manager searches rose by 5% last year, and assets placed climbed to $22bn (€16bn) from $17.8bn, according to the survey.

International multi-asset strategies were the most popular searches there, but, in terms of the weight of assets placed, developed market equities continued to dominate search activity, it said.

Search activity rose in the rest of Europe, driven primarily by a big hike in both search numbers and assets placed in Germany.

Infrastructure and timber were the most popular search categories in the region, it said.

In Asia, manager search activity jumped to 66 in 2013 from 17 the year before, while assets placed rose to $3.5bn from $2bn.

In Australia, search activity dropped to 85 from 111, with assets placed rising to $13.7bn from $6.8bn.

In the US, meanwhile, manager searches continued to decline across defined benefit (DB) and defined contribution mandates.

Within DB in the country, Mercer said, equity and bond searches fell while interest in alternatives grew. 

The most popular search category in the US last year was emerging market equities, although Mercer said US fixed income had had the largest share of assets placed.

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