Global equity favoured as asset allocations stabilise
Satisfaction with existing investment manager mixes, coupled with strong performance in equity and fixed interest markets has seen a marginal downturn in manager search activity in 2005 compared with the previous year.
Overall, manager search activity fell from 764 searches to place US$84.2 billion in 2004, to 748 searches to place US$76 billion in 2005 according to Mercer Investment Consulting’s latest report of global investment manager searches by institutional investors.
International equity overtook US equity as the most popular product category for the consulting company’s clients in 2005, with 164 searches accounting for nearly US$16 billion, or 21 per cent of total assets placed.
US equity was the second most popular, with 75 searches to place US$7.4 billion or just under 10 per cent of the total.
The report found that in the US, international mandates were most frequently sought with some diversification into alternative investments and rebalancing between growth and value, and small cap and large cap equities.
Global equity mandates were also popular in Asia, representing 36.4 per cent of searches and accounting for nearly one-third of placements for Asia, up from just 1.0 per cent the previous year.
This was despite overall stagnation in numbers of search (44 in 2005 compared with 43 in 2004) and a dramatic fall in assets placed from US$6 billion in 2004 to US$3.4 billion in 2005.
Mercer’s Asia head of research Marianne Feeley said search activity in Asia often varied from year to year.
“In 2006 we expect to see sustained interest in search activity as Asian markets continue to open up to offshore investments and institutions,” she said.
In Europe (excluding UK) search activity almost doubled to 2005 with 152 searches conducted, up from 78 in 2004.
Mercer’s European head of research Andy Barber said Ireland saw the most search activity within the region, driven by changes in asset allocation and a trend away from single-manager balanced structures towards structures seeking global equity exposure.
He expected specialist search activity to increase across Europe in 2006, continuing a trend of expansion last year.
Barber said most search activity in the UK was related to global equity, but private equity was becoming increasingly popular.
In Australia, property was the most popular mandate, rising from 10.9 per cent to 23.7 per cent of activity in 2005 and US$1.1 billion in assets placed, with investors seeking diversification and higher returns.
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