Deals & People July 8, 2013

Mercer Appoints West Market Investment Director

Christine Carolan has been appointed by Mercer Investments as investment director for its West Market.
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The West Market covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming. In this position, Carolan will be a senior member of Mercer’s U.S. Investments business and will have responsibility for integrated delivery of Mercer’s investment services and solutions to the firm’s current as well as prospective clients.

“Christine’s proven consulting and problem solving approach to business development, coupled with her experience in the investment and retirement markets, make her ideally suited for her new role,” said John Nussbaumer, national sales leader for Mercer’s Investment Services. “Specifically, Christine’s experience will be highly valuable as we assist clients and prospects in developing a customized delegated investment model for their defined contribution retirement plans, a trend that has accelerated considerably in the past year.”

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Previously, Carolan was Mercer’s outsourcing market leader for its Western Region, where she was responsible for sourcing 401(k), defined contribution (DC), defined benefit, health and welfare, total retirement outsourcing, and total benefits outsourcing solutions and administration services.

Carolan has 20 years of experience in employee benefits, with a specific expertise in DC plan administration and investments. Prior to joining Mercer in 2010, she was a vice president at T. Rowe Price Group and served as a senior sales executive for T. Rowe Price Retirement Plan Services for more than 13 years. She also worked in the DC groups of Barclays Global Investors and Watson Wyatt. Carolan began her career at IBM Corporation.

Carolan holds a B.A. degree in economics from Fairfield University.

The Markets July 8, 2013

Pension Funds Increase Allocations to Alternatives

A survey from Towers Watson found allocations to alternative assets by pension funds now account for around 19% of all pension fund assets globally.
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“For almost all of the past 10 years of this research, we have seen increasing allocations to alternative assets by a wide range of investors,” said Zainul Ali, head of manager research, Americas, at Towers Watson Investment Services. “Not only has the appeal of alternative assets broadened to include insurers and sovereign wealth funds, but the range of alternative assets has also increased beyond real estate and private equity to include direct hedge funds, infrastructure and commodities. Not surprisingly, allocations to alternative assets by pension funds now account for around 19% of all pension fund assets globally, up from 5% about 15 years ago.”

The “Global Alternatives Survey” shows that pension fund assets represent more than one-third (36%) of the top 100 alternative investment managers’ assets, followed by wealth managers (19%), insurance companies (9%), sovereign wealth funds (6%), banks (5%), funds of funds or FoFs (3%), and endowments and foundations (2%).

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The survey also shows that for the top 100 managers, North America continues to be the largest destination for alternative capital (46%), with infrastructure as the only exception where more capital is invested in Europe. Overall, 37% of alternative assets are invested in Europe, 10% in Asia Pacific and 7% in the rest of the world.

In a ranking of top 100 asset managers by pension funds, these assets increased by around 8% from the year before to reach $1.3 trillion. Real estate managers continue to have the largest share of pension fund assets with 39%, followed by private equity funds of funds or PEFoFs (20%), private equity (14%), hedge funds (9%), infrastructure (9%), funds of hedge funds or FoHFs (7%) and commodities (1%).

Compared on a like-for-like basis, pension fund assets managed by infrastructure managers, private equity managers and PEFoFs managers increased by 14%, 12% and 7% respectively. During the same period, pension fund assets managed by the top FoHFs and hedge fund managers grew by 13% and 12%, respectively. Pension fund assets managed by real estate managers declined by 3%.

"We continue to see pension funds globally putting their faith in alternative assets to help deliver more reliable risk-adjusted returns at the total-fund level, as evidenced by the growth, significant in some instances, in all but one asset class. Further to the increased acceptance of alternative assets in their portfolios, we expect pension funds to continue making larger allocations and to access these assets differently. In particular, we expect a continuing shift toward investing via individual managers rather than funds of funds - particularly in hedge funds and private equity - as these managers improve their structures and are seen as a more efficient implementation route than fund-of-funds vehicles," said Ali.

The survey was conducted for the year through December 2012 to rank the largest alternative investment managers. The survey includes 578 investment manager entries comprising 90 in real estate, 71 in fund of hedge funds, 58 in private equity fund of funds, 175 in hedge funds, 87 in private equity, 62 in infrastructure and 35 in commodities. For real estate, commodities and infrastructure, individual managers are included. The majority of the data (533 entries) come directly from investment managers, with the remainder coming from publicly available sources.

A copy of the survey can be found here.

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