Top 10 Products Among Institutional Investors
January 22, 2013 6:27 PM
Top 10 Products Among Institutional Investors
Institutional investors' philosophies are changing with the times. The products they're asking for are becoming more and more in-line with larger social and macro-economic trends, according to a report from Boston-based consulting firm Cerulli Associates and the Institutional Investor Institute. Given the heightened global turmoil and volatility, for example, many have moved farther away from traditional assets and are now asking for exposure to emerging markets and different kinds of fixed-income. They're also showing more interest in investing in socially responsible and environmental and social governance, Cerulli reported. Moreover, the changing dynamics of retirement planning have also affected how some pension funds are invested. Click through for the full list of the top 10 products institutional investors have requested of advisors and asset managers in the past twelve months.
Credit: U.S. Institutional Markets 2012, Cerulli Associates
Credit: U.S. Institutional Markets 2012, Cerulli Associates
10. PRIVATE EQUITY MANDATES
12% of managers received Several Requests
88% received No Requests
Since the financial crisis of 2008, the amount of dry powder has been high, with private equity firms sitting on more than $1 trillion
in dry powder at the end of 2011. When they decide to allocate to private equity, 43% of institutions hire an external consultant to
assist in their alternatives due diligence process. -Cerulli
88% received No Requests
Since the financial crisis of 2008, the amount of dry powder has been high, with private equity firms sitting on more than $1 trillion
in dry powder at the end of 2011. When they decide to allocate to private equity, 43% of institutions hire an external consultant to
assist in their alternatives due diligence process. -Cerulli
9. REAL ASSETS (E.G., TIMBER) MANDATES
17% of managers received Several Requests
28% Received One or Two Requests
28% Received One or Two Requests
8. REAL ESTATE MANDATES
19% of managers received Several Requests
6% Received One or Two
6% Received One or Two
7. TAIL-RISK HEDGING MANDATES
26% of managers received Several Requests
21% Received One or Two Requests
With interest rates and default rates at historical lows, investors are in search of yield and adding to their high-yield allocations.
Meanwhile, as corporate pension plans continue to derisk, there is a need for more long-duration products to better manage
their risk profile and match the duration of their assets and liabilities. -Cerulli
21% Received One or Two Requests
With interest rates and default rates at historical lows, investors are in search of yield and adding to their high-yield allocations.
Meanwhile, as corporate pension plans continue to derisk, there is a need for more long-duration products to better manage
their risk profile and match the duration of their assets and liabilities. -Cerulli
6. RESTRICTIONS AGAINST HOLDING CERTAIN SECURITIES
30% of managers received Several Requests
20% Received One or Two Requests
We have found that many large public pension funds are adopting processes for integration of ESG investments into their
portfolio, Michele Giuditta, associate director at Cerulli, explained. As institutional markets become increasingly competitive, asset managers are finding ways to diversify
their offerings and socially responsible investing is one form of diversification we are seeing.
20% Received One or Two Requests
We have found that many large public pension funds are adopting processes for integration of ESG investments into their
portfolio, Michele Giuditta, associate director at Cerulli, explained. As institutional markets become increasingly competitive, asset managers are finding ways to diversify
their offerings and socially responsible investing is one form of diversification we are seeing.
5. HEDGE FUND MANDATES
32% of managers received Several Requests
22% reported One or Two Requests
"Hedge funds and other alternative assets are also anticipated to continue to attract more assets over the next few years, as institutional investors look for non-correlated assets and greater diversification," Cerulli said. "While recent hedge fund flows have decreased, institutional investors long-term allocations are expected to increase."
22% reported One or Two Requests
"Hedge funds and other alternative assets are also anticipated to continue to attract more assets over the next few years, as institutional investors look for non-correlated assets and greater diversification," Cerulli said. "While recent hedge fund flows have decreased, institutional investors long-term allocations are expected to increase."
4. MULTI-ASSET CLASS PRODUCTS
40% of managers received Several Requests
20% Received One or Two Requests
20% Received One or Two Requests
3. SOCIALLY RESPONSIBLE/GREEN/SUSTAINABLE MANDATES
45% of managers received Several Requests
30% Received One or Two Requests
"Interest in socially responsible and environmental, social and governance (ESG) investing has increased in recent years from more than just non-profits. Many large public pension funds are adopting processes for integration of ESG investments into their portfolios," Cerulli said.
30% Received One or Two Requests
"Interest in socially responsible and environmental, social and governance (ESG) investing has increased in recent years from more than just non-profits. Many large public pension funds are adopting processes for integration of ESG investments into their portfolios," Cerulli said.
2. LONG DURATION FIXED-INCOME MANDATES
47% of managers received Several Requests
24% received One or two requests
With interest rates at historical lows, investors are in search of yield and adding to their high-yield allocations. Meanwhile, as corporate pension plans continue to derisk, there is a need for more long-duration products to better manage the risk profile and match the duration of their assets and liabilities. - Cerulli
24% received One or two requests
With interest rates at historical lows, investors are in search of yield and adding to their high-yield allocations. Meanwhile, as corporate pension plans continue to derisk, there is a need for more long-duration products to better manage the risk profile and match the duration of their assets and liabilities. - Cerulli
1. EMERGING MARKETS MANDATES
55% of managers received Several Requests
20% received One or two requests
Over the last year, there have been several requests (reported by 55% of managers surveyed) from clients to run emerging market (both fixed income and equity) mandates. With interest rates at historical lows, investors are in search of yield and adding to their high-yield allocations. -Cerulli
20% received One or two requests
Over the last year, there have been several requests (reported by 55% of managers surveyed) from clients to run emerging market (both fixed income and equity) mandates. With interest rates at historical lows, investors are in search of yield and adding to their high-yield allocations. -Cerulli
