Manager search activities increased globally as investors continued to move away from domestic fixed income and equity, according to Mercer's annual Global Manager Search Trends report.
Manager searches up 14% for Mercer in 2010
In 2010, Mercer advised on 940 searches, a 14% increase over the 826 searches conducted in 2009. However, the aggregate value of the searches fell slightly to $95.6 billion from $97.2 billion a year ago.
Global and international equity searches were the most popular, with 177 searches compared to 191 in 2010. In the U.S., for example, the number of global and international equity searches rose to 54 from 44 in 2009, according to the report.
“In the (defined benefit) space, the main driver of search activity was sponsors' focus on increasing exposure to international equity — both developed and emerging markets. Sponsors also sought to review and realign their domestic equity exposures,” Terry Dennison, U.S. director of consulting within Mercer's investment consulting unit, said in a news release about the report.
“On the (defined contribution) side, sponsors showed a desire to both increase asset diversification for their members and provide some inflation protection.”
Real estate searches continued to interest investors, with 72 searches conducted in 2010 compared to 67 in the previous year. Other assets with some inflation-protection characteristics — including commodities and infrastructure — also attracted more searches. Mercer conducted 20 searches for commodities strategies in 2010 vs. seven in the previous year. The number of infrastructure searches totaled 17 in 2010 vs. 14 in 2009, according to the report.
Emerging markets searches, both in equity and debt, saw a substantial increase globally. Emerging markets equity searches rose to 50 in 2010 from 21 in 2009, and emerging markets debt searches increased to 45 from four.
Overall, manager searches in the U.S. fell to 280 compared with 299 the previous year, according to the report. Information on the total assets for the U.S. searches was not available by press time.
In the U.K., the number of searches dropped to 196 searches totaling $23.9 billion compared to 245 searches totaling $41.9 billion the previous year. However, the number of searches in the rest of Europe rose to 168 totaling $35 billion in 2010 compared to 126 with aggregate assets of about $10 billion in 2009.
In Asia, the number of searches nearly doubled to 70 vs. 40 the previous year. However, total assets linked to the searches dropped to $4.8 billion from $19.2 billion. Search activities also markedly increased in Australia, where 216 searches totaling $14.9 billion were conducted in 2010 vs. 120 with aggregate assets of $7.7 billion the previous year, according to the report.