October edition: Insights from our Large Asset Owner Barometer, a CIO’s view on the path ahead and more.

Opportunities and concerns driving the actions of the world’s largest pools of capital

Particularly large asset owners are a distinct group of institutional investors. While they may have diverse objectives, such as safeguarding beneficiaries' financial futures and driving societal impact, their size leads to common traits that set them apart, including longer-term time horizons, greater autonomy, and the ability to allocate capital across various asset classes. Their influence in financial markets and society is significant, especially in the face of challenges like inflation and climate change.

Mercer Investments' 2023 Large Asset Owner Barometer provides valuable insights into the investment intentions and risk management practices of these influential investors. Our Large Asset Owners are confident their portfolios are well positioned, are interested in exploring riskier assets to boost returns, and show a growing interest in private markets, with plans to increase allocations to private debt, equity, and infrastructure.

“Despite an uncertain market outlook, this category of investor is confident in the resilience of their portfolios, which has positive implications in relation to demand for risk assets,” Eimear Walsh , Head of Investments, Europe

Sustainable investing is another area of focus for Large Asset Owners, although there is a dispersion of approaches when it comes to sustainability. While most have incorporated climate change policies, fewer have set transition targets and implemented them. The report also highlights the importance of governance and risk management in their investment decisions, with back and middle office risks considered significant. Overall, understanding the decisions and strategies of Large Asset Owners provides valuable intelligence for investors managing their own portfolios.

Exploring Single Family Office strategies

In our latest podcast episode, we delve into the world of Single Family Offices, each one a distinct entity with its own set of structures, objectives and internal dynamics. Paul Fleming is joined by Beth Johnson and Michel Meert, as they shed light on the challenges and opportunities that currently define the Single Family Office landscape.

The discussion includes the role of governance, succession planning and the ever-evolving landscape of long-term investment trends, including the adoption of impact-driven strategies.

Subscribe to our global podcast series to hear the latest investment themes and opportunities.

The expert panel of Chief Investment Officers (CIOs) at our recent Global Investment Forum in Atlanta showcased a broad array of expertise from endowments and foundations to pensions and insurance, yet all our panelists have faced many similar challenges, such as higher rates and inflation. They emphasized the importance of diversification through private markets to offset inflation's impact and generate higher returns, and highlighted careful manager selection as crucial for success in different asset classes.

The CIOs also recognized the growing significance of environmental, social, and governance (ESG) factors, with a focus on sustainability and diversity as drivers of returns. They emphasized the need for flexibility and adaptation in portfolio management to navigate changing market conditions and capitalize on opportunities in the transition to a net-zero carbon economy.

As markets continue to evolve and the macroeconomic outlook changes, there will be many challenges and opportunities. By remaining flexible and taking the advice and approaches from their peers and rivals, CIOs will be able to adapt their portfolios, potentially enhance returns and preserve capital.

Read the full article.

Join our LinkedIn Live on November 9 4:00 PM EST (November 10, 8:00 AM AEDT) where three Mercer Investments CIOs will discuss ways to construct today’s optimal portfolio.

Our clients and investors globally recognize ongoing market uncertainty but continue to seek improvements in investment outcomes while deploying their capital in a risk-aware way. Hear Olaolu Aganga , US CIO, Kylie Willment , Pacific CIO, and Garvan McCarthy , EMEA and Asia CIO, offer their take on the landscape today, as host Jennifer Kruse leads the discussion around asset allocation, holding and managing risk and having the reporting and risk frameworks in place for resilient portfolios.?

Register here!

This month we’d like to introduce you to Nick Davies , who leads Mercer’s engagement with large investment clients across the US.? Nick is an institutional global investment consultant and asset allocation/risk specialist with expertise in the full spectrum of investment advisory and delegated fiduciary management/OCIO solutions, as well as strategic advice and implementation across the investment, retirement and benefits landscape.

His global consulting responsibilities include serving as a senior investment consultant for sovereign wealth funds, defined benefit and defined contribution pension plans, as well as other investment trusts. He focuses on transformational investment ideas for large, complex clients including developing procedures and policies, consideration of ESG factors as well as implications for broader strategic asset allocation.

In his spare time, you’ll find Nick rowing, cycling, running and hiking – exploring and finding new adventures.?

Nick was a guest on the recent Mercer Investments LinkedIn Live where he spoke with Eimear Walsh , Head of Investments, Europe and Rich Nuzum, CFA , Global Chief Investment Strategist, on the findings from our inaugural Large Asset Owner Barometer. Watch the replay if you missed it and be sure to connect with Nick and ring his bell to keep up with his content and insights.

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