EUROPE – Seventy-five percent of European fund managers expect socially responsible mandates to increase in Europe in 2003, with a similar figure expecting investment industry consolidation – according to new research by Mercer Investment Consulting.

Mercers said that 75% of the respondents to its Fearless Forecast of pan-European investment managers said they believed socially responsible mandates will increase in 2003.

Seventy-six percent said they expected investment industry merger and acquisition activity to increase in the year. Perhaps surprisingly, 67% predicted global market volatility would decrease in the coming year, with 13% saying it is set to increase and 20% saying it will stay the same.

Of the top ten issues facing the capital markets, 42% of respondents see the global economy as the most important. Corporate governance was the least likely to have an impact, with just 1% saying it was important.

Sixty-six percent of asset managers said they benchmark the MSCI World Index for their global equity portfolios.

Mercers said managers were generally positive about European equities in 2003 – it said respondents expect returns of around 15% for European and UK equities.

European interest rates were expected to be stable at between 2.6% -2.7% over the next year. A majority of those questioned, 58%, said the European Central Bank was not doing a good job of managing the Euro economy.

Euro-area inflation was seen declining to 1.8% from the current 2.2%. Unemployment was seen rising to at the end of the year to 9.4% from the current 8.3%.

Mercers surveyed 66 pan-European managers and 40 global players.