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New mandates surge as private markets prove attractive
A surge in funds manager searches by institutional investors in the year to March was led by appointments in private markets, in both number of searches and the size of the mandates, according to the quarterly report from search consultant bfinance.
The bfinance quarterly analysis also shows that there was a significant increase in interest in hedge funds of funds and listed infrastructure and REITs, after weak demand over the past three years. Small-cap equities also surged, both for global mandates and regional. Overall, the number of mandates searched for in the past 12 months was up about 50 per cent.
Asian investors also led the way in terms of number of searches, particularly vying for “diversifying strategies such as hedge funds. UK showed the most new interest in private markets of any region. The global search and consulting firm, however, notes that its figures tend to run contrary to actual fund raisings in private markets in the first quarter for the year, which have been soft.
The strong demand for emerging markets equity and debt strategies evident throughout 2017 has continued into this year, bfinance says.
In the equities markets, the sector which had the most new mandate searches was global emerging markets plus Asia ex-Japan, which represented 36 per cent of all equities searches. Global equities mandates was next with 24 per cent, followed by Japan plus Pan Asia (including Japan) with 16 per cent. North America, the biggest region for pension funds, represented only 8 per cent of equity searches, which may reflect the UK-based bfinance’s reach rather than a true indication of activity.
On private markets globally, the bfinance report says: “The extended period of strong performance across private markets has led to increasing concerns over valuations in the various asset classes, although there are considerable variations by geography and strategy. Even those that are attractively priced in relative terms are fairly expensive in absolute terms. This challenge, and the need to identify more attractive or well- insulated opportunities, continues to be the primary concern for institutional investors working with bfinance.”
– G.B.
