Mercer client searches tick up 4.6% in 2012, but asset value drops 32%

Manager search activity among Mercer clients globally increased 4.6% to 776 in 2012, while the $53 billion in assets placed was down 32% from the previous year, according to the investment consultant's 2012 Global Manager Search Trends report.

The most popular asset class last year was global and international equity, although the number of searches, 79, was down 23% from 2011. Assets placed in 2012 totaled $12.59 billion, a 30% gain, according to the report.

U.S. equity was ranked second by number of searches, with 68 vs. 65 in 2011, while assets placed dropped 7% to $1.3 billion.

Emerging markets equity investments rose 86% to $4.1 billion, and emerging markets debt jumped 200% to $3.9 billion.

Global fixed-income searches rose 67% to 50, while the $3.1 billion in assets placed was down 11%.

“We've seen increasing interest in non-traditional fixed income,” Andy Barber, partner and technical leader of Mercer's manager research team, said in a news release about the report. “Investors have been looking to reduce their equity exposure but have been reluctant to add to traditional fixed-income holdings, such as sovereign government (bonds) and credit, at current yield levels. The result was a variety of different fixed-income mandates — notably absolute return and emerging market debt.”

U.S. fixed income rose 69% to $2.94 billion, while the number of searches rose 77% to 46.

“In the U.S. in 2012, we saw a shift in search activity from equities to fixed income,” Terry Dennison, senior partner and director of U.S. consulting, said in the release. “This was driven by investors' desire to restructure their fixed-income allocation to take advantage of interesting opportunities. We appear to be in the midst of a secular change with fixed income experiencing an image change from a conservative plain vanilla asset class to one that is more exotic and exciting.”