An analysis by Mercer Investment Consulting showed that 1,147 searches were conducted in 2003, with an average asset placement at $90.1 million.
Domestically, 575 searches were conducted for defined benefit and defined contribution plans. The average defined benefit placement was $60.1 million, with total assets valued at $10.1 billion. (Comparable asset information is not available for defined contribution searches.) In Canada, 102 searches were conducted for plans, with total assets valued at $5.1 billion and an average asset placement of $50 million Mercer IC reported.
International mandates were the most frequently sought asset class in both U.S. defined benefit and defined contribution searches in 2003 while domestic balanced and equity mandates were among the hottest in Canada.
Although search activity was distributed throughout North America, Europe, and Asia, North American fund sponsors conducted the most searches, as the nature of retirement plan investments in North America often generates many searches with relatively fewer assets placed. The majority of assets were placed by European fund sponsors ($40.9 billion), who also represented the largest average placement ($141 million).
According to the Mercer, 2003 search activity was driven by three key trends around the world:
- defined benefit plan portfolio restructuring (from home country to international or global mandates, from multi-asset and core mandates to specialist mandates, and from core mandates to alternative investments)
- creation of new defined contribution plans or restructuring of existing plan portfolio options
- Increasing sensitivity to retirement plan funding issues, resulting in more frequent asset liability studies and performance monitoring.
In the U.K., 222 searches were conducted for plan sponsors, with total assets valued at $20.7 billion and an average placement of $93.2 million. In the rest of Europe, 68 searches were conducted, with total assets valued at $20.2 billion and an average placement of $297.1 million. Global equity mandates were among the most frequently sought in both the U.K. and the rest of Europe.
The report is available for $3,000 per copy from www.mercerIC.com .