International equity searches in 2012 high among institutional investors

Strong appetite also seen for non-traditional fixed income.

According to data released by Mercer, globally, manager search activity increased in 2012 as institutional investors looked to diversify their portfolios, pursuing opportunities in Global/International Equity, US Equity and Emerging Markets Equity asset classes.

The Mercer data also highlighted an increased appetite amongst investors for non-traditional Fixed Income. These debt instruments were seen to present investors with opportunities whilst sovereign bonds were perceived to have limited investment potential and higher risks. Moreover, Mercer noted increased interest in direct and listed infrastructure investment and, more broadly, in alternatives.

The data comes from Mercer’s 2012 Global Manager Search Trends report which gives insight into institutional investment manager hiring patterns and search trends around the world. The report is based on activity reported through Mercer’s global client database. Overall, search activity increased in most regions with the number of searches undertaken by the consultancy standing at 776 in 2012 compared to 742 in 2011.

Andy Barber, Partner and technical leader of Mercer’s Manager Research team, commented: “We’ve seen increasing interest in non-traditional fixed income. Investors have been looking to reduce their equity exposure but have been reluctant to add to traditional fixed income holdings, such as sovereign and credit, at current yield levels.

The result was a variety of different fixed income mandates - notably absolute return and emerging market debt. The desire to further diversify growth portfolios is evident from continuing interest in alternatives, with infrastructure in particular attracting an increased proportion of search activity.”

According to the report, Global/International Equity remained the most popular search and, even though the number of searches in this category declined in 2012, the assets placed increased by almost 30%.

US Equity was ranked second, followed by Emerging Markets Equity, Canadian Equities and Global Fixed Income. Search activity across a range of alternative asset classes was also robust particularly with Infrastructure, private equity and multi-strategy hedge funds.