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Alternative investments

We can be a partner to your alternatives portfolio and help you generate new ideas and uncover innovation through private markets and hedge funds.
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Private markets and hedge funds present the opportunity for investors to significantly expand their investment opportunity set, with the potential to tap into the major growth drivers of the future economy, and achieve greater diversification, crucial to achieving greater portfolio resilience.  

However, in an increasingly complex and crowded investment universe, the ability to identify and access managers is becoming even more challenging for asset owners. We believe successful implementation depends on four key areas:

  • Effective manager selection & access

    Deep and broad market coverage, combined with strong relationships with GPs, an ability to tap into emerging managers, and a rigorous and repeatable manager selection process.

  • Sophisticated diversification

    Exposure to investments across sectors, geographies and vintages, including tactical tilts to high-conviction ideas and niche opportunities. Exposure-building, not bucket-filling.

  • Strong risk management frameworks

    It’s critical to understand the types of risk investors hold in their portfolios and where they hold it, which is why we strongly advocate for a ‘total portfolio’ approach that assesses risk both from the bottom up as well as the top down.
  • Effective manager selection & access
    Deep and broad market coverage, combined with strong relationships with GPs, an ability to tap into emerging managers, and a rigorous and repeatable manager selection process.
  • Sophisticated diversification
    Exposure to investments across sectors, geographies and vintages, including tactical tilts to high-conviction ideas and niche opportunities. Exposure-building, not bucket-filling.
  • Strong risk management frameworks
    It’s critical to understand the types of risk investors hold in their portfolios and where they hold it, which is why we strongly advocate for a ‘total portfolio’ approach that assesses risk both from the bottom up as well as the top down.
Which is why having a trusted partner can help you position your portfolio to reach its full potential. 

The future of private markets

Investing in the age of megatrends: a total portfolio approach
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Types of alternative investments

Private markets

Private markets offer diversification away from listed markets and the potential for compelling risk-adjusted returns. They also offer an illiquidity premium and have the potential to provide greater protection from market shocks.

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Hedge funds

Hedge funds represent an investment tool that can provide diversification (relative to both equity and interest-rate risk), with minimal trade-off in return.

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Benefits of alternative investments

  • New ideas, innovation and diversification

    With moderate correlation to traditional asset classes, alternatives can diversify your portfolio and introduce new innovative ideas and strategies.

  • Potential for better returns

    Alternative investments offer a different return profile for an institutional portfolio. They tend to have low correlation to stocks and bond markets, adding diversification or hedging against market downturns.

  • Integration of sustainable and impact investing

    There are a growing number of sustainable investing strategies in private markets. These offer the potential for you to address your business objectives and develop a holistic plan that seeks to reduce risk while maximizing returns.

Three considerations for alternative investments

Making an allocation to these asset classes is a long-term commitment. In many cases, capital is deployed over a period of several years. This makes it essential to gradually scale up your investment through a well-established cash-flow management strategy. We can help you plan your allocation strategy, deploying capital when needed without disrupting other areas of your portfolio.

Establishing and nurturing manager relationships is a vital part of the alternatives investment process. We have longstanding and deep-rooted relationships with managers across all alternative asset classes around the world — managers who seek long-term, like-minded investors. We can therefore offer you access to the strategies and managers best suited to your needs.

The universe of alternative investments is growing as managers innovate and new opportunities arise. Keeping pace with these changes requires global reach and significant research capabilities. Our large team of researchers around the world are constantly monitoring existing managers and funds, and are well positioned to identify the most appropriate opportunities for you.

Integrating alternative investments into your portfolio

Whether you're considering alternative investments for the first time or have an established portfolio, our flexible approach can help you achieve your goals. We adapt our services to match your requirements.

  • Access manager research

    MercerInsight®, an alliance with eVestment, provides access to insights and analytics on more than 6,700 managers and 35,000 strategies1. Get MercerInsight®.

  • Seek advice

    We can provide guidance and advice on your alternatives strategy, alongside access to our global manager research network. We'll help you build your portfolio. Contact us today.

  • Implement a solution

    We can help you design and implement an investment plan to suit your needs and complement your strengths. Our offering includes our fully outsourced chief investment officer (OCIO) or fiduciary management services. Discover our solutions.

A Partner to Your Alternatives Portfolio

We partner with our clients with the goal of building innovative, resilient and agile portfolios designed to deliver their individual governance and investment needs.

By leveraging our dedicated team’s knowledge and close relationships with GPs, we help deliver simplified access to private markets. Integrating a diverse range of private market strategies – including secondaries, co-investments, private debt, private equity, real assets and global impact – we help clients access opportunities across the spectrum, aimed at driving long-term value and portfolio differentiation.

A total portfolio approach is in Mercer’s DNA – for over 80 years we’ve been a trusted partner for institutions, helping them achieve their overarching investment objectives. This requires a culture of collaboration whereby asset class specialists are aligned with total portfolio outcomes rather than siloed single-asset success measures. Our investment staff have an integrated way of assessing opportunities and exposures at the total portfolio level, with governance frameworks that can adapt to help ensure  portfolios are best positioned for the evolving market environment.

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Alternative Investment Strategy Objectives

Private Markets

The alternatives strategy you choose will depend on a range of factors, including your specific objectives, risk tolerance and liquidity requirements. We can help you explore all the available options and customize a strategy that works for you.

Hedge Funds

Balance diversification with high-conviction views.
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Partnering with institutional investors across industries

We work with professional investors of across a range types and sizes.

Our alternative investments approach can flex to suit you

Our work begins with the knowledge that no two clients are the same. Whether it’s cash-flow, targeted returns or familiarity with private markets, each organization has its own unique requirements. We know that pension providers, endowment funds, insurance companies and wealth management firms will all have different approaches and needs. Our flexible services allow us to meet these requirements.

We construct flexible private markets solutions across all asset classes. These are designed to help meet each client’s particular needs, objectives and appetite for risk. We offer a range of services, from liquidity budgeting and strategy design to in-depth operational due diligence and standardized reporting. Our dedicated, experienced teams streamline even the most complex of processes to make our clients’ lives easier.

Our fund selection process is rigorous. Mercer typically reviews more than 2,000 fund offerings each year. Following this global review process, we perform due diligence, assign ratings and make recommendations for investments. These are based on each client’s unique portfolio objectives, cash-flow requirements and risk tolerance.

Diversify your portfolio with private markets

Investment strategies that worked in previous cycles may not necessarily work in the future. For investors looking to diversify their portfolios, private market investments play an important role. They offer access to privately negotiated transactions that are not available through public market investments. Our expertise and capabilities in private markets could help with long-term portfolio growth.

Related insights

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    Contact our alternative investment specialists today