This year our survey covered over 1,200 plans from 14 countries, with total assets of over €850 billion. In this year’s survey we find that the long-observed downward trend in equity allocations continues, albeit at a reduced pace. This likely reflects a combination of factors, including low bond yields, improving sentiment and rising equity markets. The management of interest rate and inflation risk remains a high priority for pension plan trustees and the proportion of plans across Europe that allocate a portion of their assets to a liability hedging (or Liability Driven Investing (‘LDI’)) mandate increased from 26% to 29% over the past year. In addition, we see an increased allocation to a broad range of alternative asset classes, particularly in real assets and growth-oriented fixed income. Over half of the plans surveyed now have an allocation to alternatives. http://www.mercer.com/insights/point/2014/2014-european-asset-allocation-survey.html

1. REDUCED
PACE OF
EXIT FROM
EQUITIES
KEY FINDINGS
Institutional investors
diversify their credit
exposure away from
traditional corporate
bond mandates
% of plans that make use of
liability-driven investing strategies
INCREASED INTEREST
IN REAL ESTATE
Attention shifts towards niche parts of the market.
In favour:
High lease-to-value property
and ground-lease mandates
In favour:
European real estate debt and “second
tier” real estate in the UK
Trend away from equities is set to
continue over the next 12 months.
RISK MANAGEMENT
REMAINS HIGH
ON THE AGENDA,
BUT ACTIVITY
VARIES ACROSS
LARGE AND
SMALL PLANS
15/
50%
Almost half of plans surveyed
have exposure to emerging
market equities.
Almost a fifth have an
allocation to emerging
market debt.
INTEREST IN
EMERGING
MARKETS
PERSISTS
DESPITE
TURBULENCE
TRENDS FOR THE FUTURE
EVOLUTION
OF CREDIT
PORTFOLIOS
50%ofplanswith
>€500millioninassets
25%ofplanswith
<€500millioninassets
change in the
average equity holding
of plans outside the
UK over the past year
ZERO2percentage point
reduction in the average
equity allocation of
UK plans
28%
of investors looking to reduce
domestic equity allocations
25%
of investors suggesting reduction
of non-domestic equity allocation
30%
of plans intend to increase
allocations to bonds, with index-
linked gilts, corporate bonds,
and matching assets the main
areas of interest
ASSET ALLOCATION SURVEYEUROPEAN INSTITUTIONAL MARKETPLACE OVERVIEW 2014
Copyright 2014 Mercer LLC. All rights reserved.
13080A-IC
1
2
6
4
3
5
Emerging
market debt
High-yield
allocations
European
private debt
Multi-asset credit
(offering a more
diversified and dynamic
exposure to the
credit universe)