The latest Mercer data on European pension funds and their asset allocation shows an aggregate decrease in equities from 43% to 39%, and over half of them now have alternatives allocations (UK leads the way with 75%).
In other words, the era of multi-convergence is moving institutional investors more and more into alternatives to address their funding, risk management and target return objectives. Notably, smaller plans prefer liquid alternatives, while larger schemes allocate directly to specific themes and vehicles (agriculture, natural resources, managed futures, et al).
A quarter of European pension plans is looking to increase their alternatives exposure further. EMD and high yield were the most popular strategies within growth oriented fixed income.
Overall, not many surprises for portfolio construction and asset allocation trends among European pension funds, but still an inflection point for the industry as it is converging on product, distribution, regulation and geography.
Product design around regulatory requirements and finding the right people to manage more complex strategies and vehicles dominate board room discussions.
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(c) Enskat Associates 2013
More details on the global M&A in the asset management industry can be found in EAQ, a quarterly asset management review featuring thought leaders globally.
Warren Enskat Group 
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