Volatile markets and low interest rates spur demand for investment solutions

NEW YORK--(BUSINESS WIRE)-- Mercer, a global leader in redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being, today announced its global assets under management reached $321.4 billion USD as of September 30, 20201.

“We are seeing a direct correlation between the challenges of the pandemic and investors’ interest in our investment solutions. The pandemic brought on a liquidity crisis and extreme market volatility. Although equity markets have since recovered to reach new highs, long-term real and nominal interest rates remain near all-time historical lows, challenging investors’ ability to meet their long-term goals,” said Rich Nuzum, CFA, President, Investments & Retirement at Mercer. “We believe better performance has been achieved by institutional investors whose governance has handled rebalancing trades, de-risking and re-risking trades, despite the extreme market volatility earlier this year, and by investors who had capacity to consider opportunities such as high yield and private debt at the depths of the market downturn. Many asset owners are recognizing their governance didn’t succeed across all these fronts, and are looking to access outsourced chief investment officer (OCIO) investment solutions for assistance before they are tested in this way again.”

In March 2020, Pensions & Investments2 ranked Mercer first by worldwide, outsourced assets under management. In a separate survey by CIO magazine, Mercer was also rated first for global assets under management, as of March 20203. Pensions & Investments also named Mercer first by global assets under advisement as of June 30, 20204.

“Portfolios today require higher levels of diversification, requiring more asset classes, more investment managers, and overall, more operational management to contend with. This increased complexity, coupled with challenging market conditions and fee pressures, also means investors are looking for a more dynamic approach to managing portfolios. All of these requirements are driving interest in investment solutions across our client base and the broader market,” said Samantha Davidson, GUS Head, Investment solutions/OCIO services at Mercer.

“As governance has been tested this year, we have been seeing investors across the institutional marketplace such as pension schemes, insurance companies and other financial intermediaries, as well as not-for-profit entities, adopt investment solutions to support the operational management of their investment portfolios,” added Mr. Dempsey.

To learn more about Mercer’s Investments & Retirement services please click here and for more detail about our investment solutions, please click here.

To view a short video of Mick Dempsey’s assessment of the OCIO market and navigating the COVID-19 crisis, please click here.

To view a short video of Rich Nuzum speaking about the importance of governance, please click here.

1 In providing OCIO investment solutions, Mercer typically exercises investment discretion by hiring and overseeing third party asset managers on behalf of client portfolios. Global OCIO assets data is primarily but not exclusively discretionary mandates.

2 https://researchcenter.pionline.com/v3/rankings/outsourcing-manager/datatable. Pensions & Investments OCIO survey, worldwide discretionary assets under management as of March 30, 2020 as reported by each firm to P&I.

3 https://www.ai-cio.com/surveys/2020-outsourced-chief-investment-officer-survey/ ai-cio survey, worldwide discretionary assets under management as of March 30, 2020 as reported by each firm to ai-cio.

4 https://researchcenter.pionline.com/v3/rankings/consultant/datatable Pension & Investments, AUA ranked by worldwide assets under advisement as of June 30, 2020 as reported by each firm to P&I.

Pension & Investments and CIO magazine rankings are based on survey responses from responding firms. Mercer did not pay a fee to participate in these surveys. These surveys are not indicative of the investment adviser’s future performance. Please see Important Notices for important information about Assets under Advisement and Assets under Management.

5 Expected returns are hypothetical average returns of economic asset classes derived using Mercer’s Capital Markets Assumptions. There can be no assurance that these returns can be achieved. Actual returns are likely to vary. Please see Important Notices for further information on Return Expectations.

About Mercer

Mercer delivers advice and technology-driven solutions that help organizations meet the health, wealth and career needs of a changing workforce. Mercer’s more than 25,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a business of Marsh & McLennan Companies (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people with 76,000 colleagues and annualized revenue approaching $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.

Important Notices

References to Mercer shall be construed to include Mercer LLC and/or its associated companies.

© 2020 Mercer LLC. All rights reserved.

This contains confidential and proprietary information of Mercer and is intended for the exclusive use of the parties to whom it was provided by Mercer. Its content may not be modified, sold or otherwise provided, in whole or in part, to any other person or entity without Mercer's prior written permission.

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The findings, ratings and/or opinions expressed herein are the intellectual property of Mercer and are subject to change without notice. They are not intended to convey any guarantees as to the future performance of the investment products, asset classes or capital markets discussed.

For Mercer’s conflict of interest disclosures, contact your Mercer representative or see http://www.mercer.com/conflictsofinterest.

This does not contain investment advice relating to your particular circumstances. No investment decision should be made based on this information without first obtaining appropriate professional advice and considering your circumstances. Mercer provides recommendations based on the particular client's circumstances, investment objectives and needs. As such, investment results will vary and actual results may differ materially.

Past performance is no guarantee of future results. The value of investments can go down as well as up, and you may not get back the amount you have invested. Investments denominated in a foreign currency will fluctuate with the value of the currency. Certain investments, such as securities issued by small capitalization, foreign and emerging market issuers, real property, and illiquid, leveraged or high-yield funds, carry additional risks that should be considered before choosing an investment manager or making an investment decision.

Expected Return

Actual performance may be lower or higher than the performance data quoted. Actual statistics may be lower or higher than the statistics quoted. The expectations for the modelled portfolio are a compilation of return, volatility, and correlation expectations of the underlying asset classes.

Portfolio expectations are forward looking and reflective of Mercer’s Capital Market Assumptions, as defined by asset class and incorporating return, standard deviation, and correlations. Our process for setting asset class expected returns begins with developing an estimate of the long term normal level of economic growth and inflation. From these two key assumptions, we develop an estimate for corporate earnings growth and the natural level of interest rates. From these values, we can then determine the expected long term return of the core asset classes, equity and government bonds. We combine current valuations with our expectations for long term normal valuations and incorporate a reversion to normal valuations over a period of up to five years. Volatility and correlation assumptions are based more directly on historical experience except in cases in which the market environment has clearly changed. Manager impact on performance is not incorporated into expectations. The views expressed are provided for discussion purposes and do not provide any assurance or guarantee of future returns.

Not all services mentioned are available in all jurisdictions. Please contact your Mercer representative for more information.

Information contained herein may have been obtained from a range of third party sources. While the information is believed to be reliable, Mercer has not sought to verify it independently. As such, Mercer makes no representations or warranties as to the accuracy of the information presented and takes no responsibility or liability (including for indirect, consequential, or incidental damages) for any error, omission or inaccuracy in the data supplied by any third party.

Investment management and advisory services for U.S. clients are provided by Mercer Investments LLC (Mercer Investments). Mercer Investments LLC is registered to do business as “Mercer Investment Advisers LLC” in the following states: Arizona, California, Florida, Illinois, Kentucky, New Jersey, North Carolina, Oklahoma, Pennsylvania, Texas, and West Virginia; as “Mercer Investments LLC (Delaware)” in Georgia; as “Mercer Investments LLC of Delaware” in Louisiana; and “Mercer Investments LLC, a limited liability company of Delaware” in Oregon. Mercer Investments LLC is a federally registered investment adviser under the Investment Advisers Act of 1940, as amended. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Mercer Investments’ Form ADV Part 2A & 2B can be obtained by written request directed to: Compliance Department, Mercer Investments, 99 High Street, Boston, MA 02110.

Certain regulated services in Europe are provided by Mercer Global Investments Europe Limited and Mercer Limited.

Mercer Global Investments Europe Limited and Mercer Limited are regulated by the Central Bank of Ireland under the European Union (Markets in Financial Instruments) Regulation 2017, as an investment firm. Registered officer: Charlotte House, Charlemont Street, Dublin 2, Ireland. Registered in Ireland No. 416688. Directors: Sylvia Cronin, Michael Dempsey, Tom Geraghty, Abhishek Krishan, Deborah Mintern, Bruce Rigby (British) and Vincent Sheridan. Mercer Limited is authorized and regulated by the Financial Conduct Authority. Registered in England and Wales No. 984275. Registered Office: 1 Tower Place West, Tower Place, London EC3R 5BU.

Investment management services for Canadian investors are provided by Mercer Global Investments Canada Limited. Investment consulting services for Canadian investors are provided by Mercer (Canada) Limited.

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Douglas Hesney 212.508.9661 dhesney@makovsky.com

Source: Mercer