Assets in new fixed income mandates up 327%
US - Manager search activity increased in the first half of the year as investors funnelled 327% more assets into new fixed income mandates than last year, according to data compiled by Mercer.
Mercer conducted 26 fixed income searches worth US$4.7bn in the first half of the year, versus 11 worth $1.1bn the previous year.
In total, the consultant carried out 65 searches in the first half of the year, versus 61 in the first half of 2008, Mercer said. The firm placed $7.8bn this year, up from $7.3bn last year.
The most drastic change over the year was a surge in fixed income searches and a steep decline in equity searches.
Mercer's investment consulting business leader Jeff Schutes said: "Fixed income search activity was driven by several factors. First, many sponsors of defined benefit plans focused on improving the alignment between asset and liability growth to minimise their funded status risk by employing long-duration strategies. Secondly, several core fixed income managers dramatically underperformed their benchmarks during 2008 and were replaced by new managers."
Investors also turned to the credit markets as they looked for additional returns, said Schutes.
The slight increase in overall search activity in the first half of the year could be the start of the flood of searches expected this year.
In June, Mellon Transition Management chief executive Mark Keleher told Global Pensions he saw a 40% increase in pre-trade inquiries in the first five months of 2009, compared to the same time last year. He said he expected a record number of searches by the end of 2009.
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