Mercer's climb to £268.8bn AUM fuelled by non-DB assets

Mercer has reached a new high of $380bn (£268.8bn) of global assets under management (AUM) and noted that its Investment Solutions business had moved away from reliance on defined benefit (DB) pension assets.

The company stated that, between Q1 2020 and Q1 2021, almost 50 per cent of its growth in AUM came from non-DB pension assets, with defined contribution and other types of non-pension assets having increased by 245 per cent between January 2016 and April 2021.

Mercer said its Investment Solutions and OCIO services had gained traction among other asset owners including endowments, foundations, insurers, wealth managers, not-for-profit healthcare organisations and defined contribution asset pools.

The services had originally been developed to support the asset management needs of DB pension funds, but Mercer claimed institutional investors were “looking to access fiduciary management investment solutions as they continue to grapple with market volatility and trying to achieve investment goals in a prolonged low real interest environment”.

Mercer UK head of investments, Dan Melley, said: “The benefits of a fiduciary management approach for DB pension schemes are well established, including de-risking flight paths and funding level management. It is encouraging to see how other asset owners are also embracing the strong governance and operational efficiencies that a fiduciary approach can deliver.

“We’ve seen expansion in our endowment and foundation, insurance and wealth management segments over the past year, and expect that trend to continue. The integration of environmental, social and governance capabilities has become a key criterion across the client segments.”

Mercer president, investments and retirement, Rich Nuzum, commented: “In response to last year’s market volatility, there is a growing emphasis on increasing agility and the ability to dynamically assess opportunities with an eye toward capturing returns and diversification opportunities more opportunistically.

“There is a strategic change in our industry underway, driven by reviews of how existing governance arrangements performed during the pandemic. Similar to the period immediately following the 2008-2009 financial crisis, more investors believe they need to strengthen their investment governance and implementation capabilities as they allocate capital for the long term.”

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