Mercer has widened manager base to include emerging and niche managers Ela Karahasanoglu

Mercer has been carefully listening to what our clients are saying, what the institutional world is talking about and where the industry is heading. For instance, we are now focusing more on emerging and niche managers," said ElaKarahasanoglu, Principal and a Senior Manager Research Consultant at Mercer's Alternatives Boutique, Toronto, during the recent Opalesque Canada Roundtable.

Mercer is an American global financial services consulting firm; its alternatives boutique is responsible for research and advice in alternative investment.

In the institutional consulting world, smaller managers can be challenging, even the better performers, in part because they potentially pose higher operational risk, she continues. Mercer has taken that risk into account and has started monitoring such managers for investors who have the required governance that enables them to make such allocations. The consulting firm marks these allocations as suitable for the "opportunistic bucket."

"I think this clearly illustrates the direction the market is taking," she adds. "Performance and alpha is sought after in different locations rather than, say, in mega managers who have traditionally tended to gather a lot of the institutional assets."

Portfolio construction, risk management, idea generation are still very important, but she thinks the different fee levels that can go with different types of offerings are also important for many clients; "Generally, we don't want to see managers who are charging exorbitantly high fees for the risk-adjusted returns they are delivering."

Mercer's definition of emerging managers is managers with less than couple years of t......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.