April 27, 2010 / 4:00 PM / 9 years ago

Pension funds eyed debt, property in 2009-study

* Manager searches recover to pre-crisis levels

* Fixed income, bonds, property see highest increases

LONDON, April 27 (Reuters) - European pension funds hired more fund managers in 2009 than in the previous year to take advantage of bargains in crisis-hit asset classes, a study by Mercer said on Tuesday.

In the UK, manager searches recovered to pre-crisis levels hitting 245 from 189 in 2008 and 242 in 2007.

Pension schemes in Europe and around the world are moving towards a broader investment strategy, which involves allocations to alternative assets such as property and hedge funds aside from traditional areas such as equity and bonds.

The crisis accelerated this trend, allowing investors the opportunity to buy new assets at lower costs.

The asset class that benefitted most according to the Mercer study was global fixed income, where manager searches rocketed to 45 from two in 2008.

“For both corporate bonds and real estate, an element of pent-up demand was realised in 2009 as many investors had been waiting for more realistic prices before committing new money,” said Andy Barber, global head of manager research at Mercer.

Mercer said pension funds in the UK will invest more in the future in higher yielding products as the continued search for returns prompt them to venture away from mainstream markets.

Real estate manager searches grew four-fold to 28 and global equity to 57 from 48 in 2008. Assets invested in global equity nearly doubled to $13.9 billion, while the mandate size awarded in 2009 in the UK was just under $42 billion from $26.1 billion the previous year.

“Looking forward, we expect a growing interest in liability driven investment (LDI) as defined benefit pension clients seek to manage their assets with closer reference to their liabilities,” said Barber.

Mercer said that mandate searches in continental Europe increased in 2009 to 126 from 93, although the assets invested fell to $10 billion from $13.4 billion.

“Although there are regional variations (globally), we do sense a greater investor appetite for taking advantage of dislocation and low valuations than in previous market downturns,” said Barber. (Reporting by Cecilia Valente; Editing by Jon Loades-Carter)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below