Manager searches quadruple in Asia: Mercer
Asian institutional investors completed 288% more asset manager searches via investment consultancy Mercer last year than in 2012, resulting in an increase in total value to $3.5 billion from $2 billion.
The rise – to 66 from 17 – comes after the number of searches in Asia declined 70% and total value declined 66% in 2012 year-on-year, finds the firm’s annual Global Manager Search Trends Report.
Globally, 760 searches were conducted last year, compared with 776 in 2012, with investors seeking to allocate away from traditional equity and fixed income mandates, Mercer says. Total assets placed rose to $60.6 billion last year from $53 billion in 2012.
Search activity increased in Asia, Europe and the UK, but declined in Australasia and North America, though both the latter saw a rise in the value of assets placed.
Globally, fixed income saw an increase in non-benchmark-related searches, the report says, with clients seeking absolute return, unconstrained bond and multi-asset credit fund managers.
But that trend was less apparent in Asia because some of that appetite for fixed income is going to emerging market strategies, says Garry Hawker, Mercer’s director of strategic research for growth markets.
The bulk of demand in Asia was for global mandates, including equities – which saw the greatest number of searches – and fixed income.
“There are some subtle aspects to that,” says Singapore-based Hawker. “We’ve seen emerging markets [EM] come and go, but we haven’t seen any client outflow over the past 12 months in those areas. However, the inflow of new [global] mandates has slowed.”
Clients in the region probably already have some EM exposure in their home markets, he adds.
Globally, demand for multi-asset strategies increased by a third year-on-year, though most of the searches were in the UK and US.
Multi-asset strategies attracted some interest in Asia, though it was relatively limited, says Hawker.
“There are some pockets [of demand for international multi-asset ],” he says, “but I wouldn’t say it was strong demand. This is where the difficulty is in terms of the size of Asia compared to the rest of the world. Any small number can become disproportionate. “
Search activity in Asia was driven by Japan. Growth there was attributed partly to the effects of fiscal stimulus, monetary easing and structural reforms under the government’s Abenomics programme.
Hong Kong also saw strong search growth. “Clients were looking at what their strategies were in 2012 and 2013 and getting on and making some of the changes," says Hawker.
"We saw a pickup in the passive equity space [in Hong Kong]," he notes. “We saw a lot more activity in the space, with some of our clients looking to replace underperforming active managers with passive managers.”
Meanwhile, clients in China and Taiwan continued to broaden their overseas portfolios, says Hawker, while those in Southeast Asia took stock after 2012 and repositioned with new exposures rather than replacements.