GLOBAL - Institutional investors' search for managers grew globally by 22% last year and pension funds are likely to show more interest in liability driven investment, data from Mercer revealed.
The consultant said it advised on 826 manager searches across the world last year, up from 676 in 2008. The searches represented US$97.2bn in assets placed by 406 institutional investors.
Mercer global head of manager research Andy Barber said: "Looking forward, we expect a growing interest in liability driven investment as defined benefit pension clients seek to manage their assets with closer reference to their liabilities."
He added: "The trend towards global equity at the expense of domestic equity is not likely to slow down, whereas on the fixed income front there are now fewer obvious short-to-medium term opportunities. However, we do expect to see an increased interest in higher yield products as the continued search for returns causes clients to venture away from mainstream markets."
Mercer said global equity remained the dominant search category, with 191 searches accounting for approximately $25.8bn in assets placed, up by 23% from 155 searches and $23.3bn placed in 2008.
It added searches in global fixed income shot up to 92 searches, from 25 in 2008, as clients made allocations to short dated credit and convertibles. The number of real estate searches, which were 67, adjusted back up to pre-credit crunch levels from 32 in 2008 and 62 in 2007, Mercer added.
It also said most regions observed a decline in searches in domestic equity.
The most notable increases in 2009 were seen in Australia, where the number of searches doubled compared with the previous year.
In both the UK and Europe search activity also rose considerably, whereas in North America the increases were relatively small in comparison. In Asia, searches decreased by a third.
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