EUROPE - European pension funds chose to largely focus on strategic issues during last year's financial markets turmoil rather than press ahead with manager or structural changes to their portfolios, according to consulting firm Mercer.

Details of its in-house review of manager searches found while the number of searches conducted was lower than in previous years, to 676 globally, the amount being invested with Mercer's assistance globally was the highest yet.

The UK and continental Europe is said to have concentrated on reviewing pension fund strategy instead of altering managers and structures,

During 2008, Mercer advised on 676 manager searches across the world, representing US$93 billion in assets placed. Globally, searches ran at lower levels than in previous years although assets placed reached their highest levels yet.
At least 189 manager searches were conducted in the UK last year, though the amount placed actually fell from €22.8bn to €19.7bn. of which 48 were in global equities, followed by 41 searches in UK fixed income.

The number of searches in UK equity demonstrates a further diversification of assets by UK pension funds, as the number of searches conducted in domestic listed stocks fell from 32 in 2006 to 17 by 2008.

Interested in alternatives was lower than anticipated, most notably in real estate where there were just seven searches compared with 25 in 2007, and in ‘non-traditional asset classes, though multi-strategy hedge funds saw increased interest.

The focus on global tactical asset allocation and currency hedging seems to have reduced too during the market turbulence of last year as there were just 10 searches compared with 36 in 2007.

Elsewhere in Europe, Switzerland and Spain revealed the highest fall in manager search activity, though levels were broadly similar to 2007 in other countries.

Spanish and Portugese pension funds most commonly searched for balanced or multi-asset fund providers, said Mercer, while global equity and European fixed income was popular in general.

Alternatives were also the most common search among German pension funds, said Mercer.

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