Asset AllocationApril 30, 2014

New Mandate Assets Climb as Alternatives Take Hold

<em>Investor confidence may be improving as allocations to new managers are on the rise.</em>

Reported by Featured Author

(April 30, 2014) — The amount placed by institutional investors with newly appointed asset managers has begun to climb as alternatives rise up the agenda, data from Mercer has shown.

Total assets placed by the consultant’s global clients rose 14% over 2013 to reach $60.6 billion, after hitting a 10-year low of $53 billion last year.

Placements of assets had reached almost $100 billion in 2008 and 2009, as investors hurried out of some classes amid the financial crisis.

In the US, UK, Canada, and Asia, placements all rose in 2013. In continental Europe, however, the decline in the amount of assets placed that began in 2011—after a spike upwards in 2010—continued.

The investments chosen changed markedly last year, Mercer data showed, with international multi-asset products rocketing to second place behind the perennial favourite: global/international equity.

The number of searches for international multi-asset carried out by Mercer for its clients last year rose from 5% of the total to 7%. Emerging market equity, which took third place with 6.6% of the searches last year, remained in the same spot on the same level of activity. Emerging market debt, however, fell in popularity. The asset class accounted for just 3.3% of searches, down from 4% in 2012.

Private debt gained some fans in 2013; some 3% of searches were made to hunt out these managers, up from 1.7% in 2012. Private equity also picked up favour, with a rise from 3% of searches in 2012 to 3.7% last year.

One of the largest winners was infrastructure. Searches for managers of the asset class made up 3.6% of the 2012 total, but last year, this number grew to 5.1%, making it the sixth most demanded asset class.