German institutions lead surge in hunts for new managers, Mercer says

Europe’s institutional investors last year placed three times more assets with new managers than in 2009, with German clients leading a surge in searches, according to data published today by Mercer.

The consultants said European clients increased their hunts for new managers in 2010 to 168 searches, from 126 in 2009. They also grew placement of assets from $10bn to $35bn.

Europe accounted for about one third of the $95.6bn institutional assets placed globally with Mercer’s assistance last year.

Searches for German clients, whose hunger mainly focused on emerging markets fixed income and equities, represented over half all searches in Europe.

Customers in Switzerland and Sweden conducted more searches compared to 2009, but those in France, Ireland and the Netherlands did less.

Much of the interest last year globally was in emerging markets equities and debt, whose funds were fuelled with $95bn of fresh inflows, according to monitors IPREO.

Mercer noted globally searches for EM debt grew to 45, from just four in 2009. Emerging market equity searches more than doubled from 21 in 2009 to 50 last year.

Andy Barber, Mercer’s global director of manager research, said a prevailing trend now of increasing exposure to alternative investments would strengthen.

This interest comes despite hedge funds returning just 1.6% to 31 March this year, and the fact equity volatility on which hedge funds thrive sits at 18.3, only marginally above the two year trough the Vix volatility index hit in late April.

Barber 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 number of searches for commodities managers jumped from just seven in 2009 to 20 last year, while infrastructure managers were sought 17 times compared to 14 times in 2009, and multi-strategy hedge fund searches also rose, from 24 to 31.

Globally, international equity remains the most hunted-for asset class, with 177 searches last year, but more assets flowed into global fixed income – $13.5bn, compared to $11.2bn in international shares.

During 2010, Mercer advised on 940 searches across the world, up 14% from 826 in 2009, and far beyond the 676 in 2008.

David Walker

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