UK - William M Mercer has taken the unusual step of revealing its asset manager research data - data which reveals that its manager recommendations have beaten their benchmarks in 39 out of 45 asset categories.
Bill Muysken, Mercer’s global head of manager research, said: We thought it was only fair to present the results in full detail, warts and all. The details show we're not perfect, but it's gratifying to see we get it right more often than not.
According to Mercer’s data, its recommendations have beaten the overall benchmarks by 2.3% per annum, over the period from 1996 to 2001. Its recommendations have produced positive results during five out of the last six years.
Mercer assigns managers a rating from a six tier scale. It recommends firms that received one of the top two ratings in the relevant category. The results are the first Mercer has published in what will be an ongoing quarterly series.
The firm’s best performers have been Asia / Pacific regional equity managers who have added 5.9% p.a. The average for Australian mandates was 3.3% p.a, New Zealand 3.4% p.a, and Japanese 5.9% p.a.
Whilst Mercer’s Asia / Pacific managers enjoyed decent performance, the firm’s choices for the UK, Europe and North America did not fare as well. From 1996 to 2001, UK equity managers could only beat the FTSE All Share index by 0.8% p.a, whilst bond managers posted outperformance of 0.5% p.a.
European equity managers had a better run than their UK counterparts, with 1.3% pa over the period in question. Including UK equities, the European equity results fall to 1.2% pa. Overall, the average value added by European managers for all asset classes was 0.8%.
Canadian equities managers produced a 4.1% p.a return, whilst US equity manager choices managed to post a respectable result of 2% p.a outperformance.
The worst performers in the Mercer series so far are US fixed income managers. Whilst every asset class has outperformed the benchmark during the period 1996 - 2001, US fixed income managers could only muster outperformance of 0.4% p.a over the period. Data for Canadian bond managers is not yet included as it only goes back as far as April 2001.
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