We are pleased to welcome you to the June 2010 edition of Mercer's Investment Consulting e-news update.
Mezzanine debt: An attractive lending opportunity
Mezzanine debt is debt that is junior to traditional bank financing but senior to equity financing in a capital structure. In the corporate market, mezzanine debt is most prominent among middle market companies that are often too small to access traditional high yield corporate bond markets. Mezzanine debt is also part of the debt structure of private equity transactions.
The principles of diversification are well understood and traditional diversification is largely achieved through increasing the allocations to alternative assets or strategies. However, it is generally accepted that diversification did not work as well as expected during the global financial crisis. Institutional investors found out that, while their portfolios may have been well diversified for the good times, this was not the case in the bad times.
Don't be the crash dummy for your long-term investment strategy
26 May 2010
Scenario analysis, and the powerful process of strategic conversations among colleagues and stakeholders that it engenders, can be highly effective in developing credible and realistic crash test simulations of investment strategies.
By challenging status quo perspectives, scenario analysis techniques can be useful for recalibrating skills and outlooks to a changing market. This article discusses the role that scenario analysis techniques can play in developing the skills and processes that enhance the capability of institutions to be more innovative in recognising risks and opportunities.
ESG ratings update: Measuring and monitoring your investments
15 June 2010
As of the publishing date of this article, Mercer is the only mainstream consultant that assigns ESG ratings across all appropriate asset classes. As at 31 May 2010, the pool of ESG rated strategies has expanded to over 3,500 strategies across asset classes and around the globe. Momentum continues to build and Mercer will continue to pursue these issues with fund managers as more asset owners consider ESG factors in their performance review and selection criteria of fund managers.
Pension risk has become a key issue for companies, and especially for multinationals, as most of them have significant exposure in at least one country. In this article, we present the key factors contributing to this situation and offer some guidance to help multinationals review their global pension strategies in the context of their businesses.
Hedge fund managed accounts - Do they live up to expectations?
24 May 2010
The recent surge in interest in managed accounts can be seen as a response to events such as the extreme bear and bull markets of 2008 and 2009. Managed accounts have taken on more and more importance at the expense of traditional fund of fund hedge fund managers, a trend that shows no signs of abating in the near future.
Mercer has developed the ‘DC MOT’ - the Mercer Optimiser Tool for DC schemes - with the purpose of putting your existing DC arrangements through a rigorous process to determine whether you have the optimal scheme in place to meet your member’s objectives.
Mercer has won the gold award for investment consultancy at the 2010 Investment & Pensions Europe Real Estate Awards. It is the fourth time in the last five years that Mercer has won this category. The IPE Real Estate Awards honour investors and service providers for performance, transparency and innovation in investing within the real estate sector.
Investors often overlook the rights that ownership of stock affords shareholders. In this article, Mercer discusses how investors can use these rights to the fullest extent and explores different tools and approaches to behaving as an active owner.
The interesting observation was that it appeared as if DC plans in the three areas (Australia, North American and UK) had taken different paths, and although it was possible to learn from the principles underlying the products and solutions being developed in the three different markets, it was difficult to simply apply a global approach or utilize a product developed in a different market.
Mercer's updates are designed to help you and your firm better understand the dynamics of current markets, the performance of your investments, and the behaviour of your investment managers.
Throughout most of the world, Mercer Investment Consulting is an autonomous unit within Mercer Human Resource Consulting LLC, a wholly-owned subsidiary of Marsh & McLennan Companies, Inc. (MMC). In the US, the investment consulting business is operated through Mercer Investment Consulting, Inc., a wholly-owned subsidiary of Mercer Human Resource Consulting, Inc., the US operating unit of Mercer Human Resource Consulting LLC.
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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 permission. Opinions – not guarantees
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. Past performance does not guarantee future results. Not investment advice
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.
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The principles of diversification are well understood and traditional diversification is largely achieved through increasing the allocations to alternative assets or strategies. However, it is generally accepted that diversification did not work as well as expected during the global financial crisis. Institutional investors found out that, while their portfolios may have been well diversified for the good times, this was not the case in the bad times.
Scenario analysis, and the powerful process of strategic conversations among colleagues and stakeholders that it engenders, can be highly effective in developing credible and realistic crash test simulations of investment strategies.
The recent surge in interest in managed accounts can be seen as a response to events such as the extreme bear and bull markets of 2008 and 2009. Managed accounts have taken on more and more importance at the expense of traditional fund of fund hedge fund managers, a trend that shows no signs of abating in the near future.
Mercer has won the gold award for investment consultancy at the 2010 Investment & Pensions Europe Real Estate Awards. It is the fourth time in the last five years that Mercer has won this category. The IPE Real Estate Awards honour investors and service providers for performance, transparency and innovation in investing within the real estate sector.
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