U.S. Money Manager Searches up Slightly in 2009

April 27, 2010 (PLANSPONSOR.com) – Plan sponsors replaced managers who performed exceptionally poorly relative to their benchmarks during the market decline and did not start recovering when the markets began turning around.

A Mercer news release about its latest manager search data said search activity increased in 2009.

In the U.S. during 2009, 126 (DB and other non-DC) searches were conducted compared to 123 in 2008. Assets placed fell from $14.7 billion to $11.2 billon. The number of DC searches continued to outpace DB searches, increasing from 151 to 173 in 2009, Mercer noted.

According to the data, the total number of global equity searches (44) in both DB and DC plans increased compared with the previous year (39 in 2008). Continued diversification, among equity styles and capitalizations, remained a common denominator in both plan styles.

Searches in Canada 

In Canada, search activity ran at its highest levels in recent years, Mercer said. Total searches increased from 124 to 137 in 2009, and DC activity accounted for much of the increase. Following the global trend, searches in domestic equities dropped from 38 to 22 and global equity searches increased from 36 to 50. Fixed income searches also increased considerably (from 8 to 23 in 2009), along with real estate (up from 1 to 7 in 2009).

“Liability-driven solutions remain a key focus for Canadian DB plan sponsors and we anticipate more interest in de-risking strategies and operational due diligence going forward,” said Sharon Wilson, Mercer’s Head of Manager Research for Canada and Latin America, in the news release. “As DB plan sponsors look to diversify their portfolios we expect to see sustained interest in a range of alternative asset classes.”

UK Search Data 

In the UK, search levels returned to pre-credit crunch levels, increasing to 245 from 189 in 2008 and 242 in 2007. Total assets placed rose from US$26.1 billion in 2008 to US$41.9 billion in 2009.

The main increase was reflected through an increase in global fixed income searches (up from only 2 to 45 in 2009) and real estate searches (up from 7 to 28). Searches in global equities also increased, from 48 to 57, and assets placed here were close to $13.9 billion, up from US$7.1 billion in 2008.

The number of domestic equity searches was considerably lower this year, with UK equity searches falling from 17 to 8 in 2009. At US$488 million assets placed, UK equities dropped to a third of 2008 levels.

Search activity across the rest of Europe increased in 2009, although assets placed continued to fall. The most common search activities were European and global fixed income with a respective 24 and 21 searches, and global equity (21).

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.

More information is available at http://www.mercer.com/managersearchtrends.