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More than 80% of investment consultants expected to look outside the US in 2011

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Investment managers with strong capabilities in global and emerging markets equities, hedge funds and funds of hedge funds, private equity and real assets are in most demand this year from retirement plans, endowments, foundations and other large investors, according to the 2011 Consultant Search Forecast.

 

This year’s survey, “Old Wine in New Bottles,” polled 55 leading investment consulting firms in the U.S. and Canada responsible for USD10.4 trillion in assets under advisement. This was the fifth annual poll conducted jointly by eVestment Alliance (eVestment), an influential provider of global investment information and analytic technology, and Casey, Quirk & Associates, a leading management consulting firm serving the global asset management industry.

This year, three key trends are expected to reshape institutional investment in North America: Ongoing portfolio globalisation; the increasing role of “alternative” investments — hedge funds, private equity and real estate; and a greater emphasis on outcome-oriented portfolios constructed by risk budgeting and return attribution.

Additional significant findings of this year’s survey include: more than one-third of consultants expect more emerging markets equity and less international developed markets activity for the remainder of the year; more than half of US equity, US bond and EAFE searches will involve manager replacements in 2011; and half of those surveyed expect an increase in institutional interest in inflation hedging strategies this year.

In addition, more than one-third of investment consultants surveyed anticipate a boost in liability driven investing (LDI) mandates in 2011, three-fifths of consultants expect moderate or strong bond search activity this year, while consultants expect significant increases in private equity and real estate mandates in 2011

“A sluggish growth in search activity is to be expected, as many in the institutional investment industry emerge from the policy rebalancing many conducted during late 2009 and 2010, following the global financial crisis,” says eVestment Principal and Founder Heath Wilson. “eVestment and Casey Quirk hope that the latest search expectations provide a clear picture on how North American institutional investors should adapt to the changing investment frameworks and increasingly competitive environment.”

"One of the more interesting findings in this year’s consultant survey is the rising interest in private equity and real assets," says Casey Quirk Partner Yariv Itah (pictured). "Institutional investors increasingly manage toward outcomes rather than just excess return, and they want asset managers who can use illiquid investments to mitigate inflation risk and manage liabilities."

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