With a 45-year record of offering
retirement advisory services to health care and nonprofit organizations, SBS
provides long-term client advocacy without the pressure of short-term quarterly
profits, product margins and stock price issues associated with publicly traded
companies.
The company says it is one of the
largest retirement plan consulting firms in the Northeast, enabling finance and
human resource leaders to optimize their retirement plan offering to
employees.
Institutional investors should have one eye on the
opportunities from an economic recovery, and the other on managing the
substantial risks that remain, says Mercer.
According to the consultancy,
structural changes such as urbanization and the desire for sustainable growth
will provide new investment avenues. Mercer suggests investors with excess
liquidity and the financial elbow-room explore a number of investment avenues
should seek to capitalize on their flexibility.
While a ‘more of the same’ scenario
might apply to Europe, and possibly the U.K., there are indications that 2013
will see broader growth, spurred by improving economic conditions in China and
the U.S., and activity going from strength to strength in many developing
countries.
“Differentiated economic activity between countries will
provide good opportunities for bond and currency managers. The corporate sector
is awash with liquidity, and, while this may not get spent immediately, it
provides a solid foundation for any recovery,” said Divyesh Hindocha, global
director of consulting in Mercer’s Investments business. “Some companies will
prosper in this environment by making the right decisions, and others will
struggle, making for a fertile environment for active management.”
(Cont’d…)
To avoid struggling, Mercer is
encouraging clients to:
Maintain broadly diversified asset portfolios. These
will prove robust and resilient in the face of potential volatility, but
also capture value arising from the revival of economic growth in the
Western world. This tends to favor a variety of growth and real assets
including equities, real estate and growth fixed-income opportunities,
over safe-haven assets. Exposure to a wide array of different return
drivers is preferable to running a narrow spread of positions.
Hedge against inflation. Starting the process of
building some inflation sensitivity into portfolios will protect against
the possibility of unconventional central bank policies resulting in an
increase in inflation expectations.
Consider reducing commitment to ‘safe haven’ assets.
While government bonds may be held for hedging or liability-driven
reasons, investors should be clear on the investment case, given that the
prospects for positive returns are limited.
Improve shareholder engagement. Investors should use
ownership rights to ensure that they are receiving a fair share of the
returns generated by their capital. Investment managers should be
encouraged to undertake meaningful engagement with the companies in which
they invest.
Avoid unnecessary turnover and manage capital
efficiently. Any ‘efficiency drive’ ought to include consideration of
whether potential returns are being left on the table. Long-term investors
might, for example, consider the merits of locking in a portion of their
fund to ‘earn’ an illiquidity premium.
Flexibly manage portfolios. Institutions should have
the courage, as well as the governance structures and processes, to manage
their portfolios flexibly. Direction should be changed if necessary in
response to events.