Mercer to Acquire Investment Consultant SECOR Asset Management

Financial services and consulting firm Mercer, a Marsh McLennan company, announced Tuesday that it has entered into an agreement to acquire SECOR Asset Management L.P., an investment consulting firm which counts pension funds, insurance companies, endowments and family offices as clients.

SECOR had $13.8 billion in assets under advisement and $21.5 billion in assets under management as of September 30, 2024, according to the announcement. The firm offers investment strategy, tactical asset allocation, manager selection, portfolio monitoring and implementation services for asset owners.

“SECOR’s exceptional team is highly regarded in the industry for their extensive experience working with in-house investment teams and proven expertise in specialized investment implementation,” said Michael Dempsey, Mercer’s wealth president, in a statement. “We are thrilled at the opportunity to welcome this talented group and to continue developing a comprehensive and agile suite of solutions designed for the distinct needs of institutional investors.”

The acquisition will add to Mercer’s existing investment consulting capabilities. SECOR will be integrated into the wider Mercer and Marsh McLennan businesses after the acquisition closes, a spokesperson for Mercer said. The two firms will operate as separate companies until then. Mercer also acquired Vanguard’s $60 billion AUM outsourced CIO business early last year.

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“It’s terrific that our colleagues will have the opportunity to advance their careers at Mercer and that our clients will benefit from access to Mercer’s extensive global resources, valued insights and seasoned investment talent once the transaction is finalized,” said Tony Kao, founder, managing principal and CIO at SECOR, in a statement. “Having served as both an in-house Chief Investment Officer and a partner to clients, I believe that Mercer is the ideal steward for our business’s future.”

SECOR’s 40 employees in New York and London will join Mercer when the transaction is completed, which is anticipated in this year’s second quarter, pending regulatory approval and client consents.

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Tags: investment consultants, Marsh & McLennan, Mercer, Michael Dempsey, SECOR, SECOR Asset Management, Tony Kao

According to the 2024 NACUBO-Commonfund Study of Endowments, 658 institutions, representing $873.7 billion in assets, reported a $30 billion increase in spending.

Colleges and endowments in the U.S. reported strong returns and an increase in spending in fiscal 2024. This year’s “NACUBO-Commonfund Study of Endowments”, which has tracked the performance and finances of university endowments since 1974, found that the average fiscal 2024 return of 658 college and university endowments in the U.S. was 11.2%.

This is the second consecutive year in which endowments have reported investment gains, rebounding from an average 8% loss in fiscal 2022. Over the past three, five, 10 and 25 years, these endowments returned an annualized 3.4%, 8.3%, 6.8% and 6.1%, respectively.

“Returns for FY24 as well as FY23 generally support institutions’ pursuit of their long-term mission objectives, while years when returns are flat or negative, like FY22, remind us that effective stewardship of endowment assets is a responsibility demanding constant diligence and commitment,” said George Suttles, executive director of the Commonfund Institute, in a statement.

The endowments surveyed by Commonfund and the National Association of College and University Business Officers collectively manage $873.7 billion, with the median endowment having $243 million in assets under management.

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Asset Allocation

In 2024, smaller endowments outperformed their larger peers, mainly due to their asset allocations. These smaller institutions had portfolios with higher allocations to equities, while larger endowments held more of their assets in alternative investments like private equity and venture capital.

There were few material changes to asset allocation from 2023, so endowments remain more heavily invested in alts; the private markets asset classes make up more than half of the funds’ average asset allocation. Private equity is the largest asset class in endowment portfolios, with, on average, a 17.1% allocation. Marketable alternatives make up 16.1% of portfolios and venture capital 11.7%. Real assets had a 10.8% weight.

U.S. equities had an average allocation of 13%, followed by non-U.S. equities (10.8%), fixed income (10.2%), global equities (8.3%), non-U.S. equities (5.6%), emerging markets (4%) and other (3%).

Larger endowments—those with more than $5 billion in assets—reported higher returns over longer periods of time. These endowments reported 10- and 25-year annualized returns of 8.3% and 6.5%, respectively.

Smaller endowments, with less than $50 million in assets, reported 10-year annualized returns of 6.5% and 25-year returns of 4.5%.

Endowment Spending

According to the survey, endowments withdrew a total of $30 billion in the 2024 fiscal year, a 6.4% increase over the prior fiscal year. Endowments funded an average of 14% of their respective institutions’ operating budgets, up from 10.9% in fiscal 2023.

Of this $30 billion, approximately 48.1% went to support student financial aid, 17.7% went to academic programs and research, 10.8% went to endowed faculty positions and 6.7% went to the operation and maintenance of campus facilities. Another 16.6% went to other purposes.

Larger endowments contributed more to operating budgets: Endowments with at least $5 billion in assets provided an average of 17.6% of operating budgets, and endowments ranging in size from $1 billion to $5 billion provided 18.9%. These were the two largest cohorts, according to the survey. Endowments in smaller size categories reported providing between 11.2% and 15.6% of their operating budgets.

NACUBO noted in the survey summary that long-term returns are important for endowment investors, as they need to keep up with their spendings rate, keep pace with inflation, pay costs related to investment management and still maintain positive returns to grow the portfolio.

The average spending rate—the percentage of an endowment that is spent every year—was 4.8% in fiscal 2024, up from 4.6% in fiscal 2023 and 4.0% in fiscal 2022.

Gifts to endowments, however, were up 18.1% over fiscal 2023. In fiscal 2024, endowments received $15.2 billion in gifts across survey participants, with the average endowment receiving $24.4 million. In fiscal 2023, gifts totaled $12.7 billion, with an average gift of $20.4 million.