BOND BOUTIQUE

HOW WE CAN HELP YOU

Mercer’s bond boutique is responsible for research and advice in all aspects of fixed income investment, including:

• Structure of fixed income allocations
• Research on fixed income investment trends and opportunities
• Due diligence on managers and strategies
• Advice on portfolio structuring
• Performance reporting
• Due diligence and assistance with fee and mandate negotiation
• Ongoing monitoring of investment managers and client portfolios

Mercer pursues a two-pronged approach to working with clients in regards to their fixed income allocation – we use both manager research and investment consulting experience to arrive at optimal solutions for clients.

• 17 average years of financial services industry experience
• Actively looking to increase the number of researchers
• 192 searches conducted in 2012, placing $16.7 billion globally
• More than 5,100  bond strategies and 108 bond product categories on Mercer’s Investment Manager Database (Mercer GIMD^TM)
• Cover both traditional core products and more esoteric absolute return mandates in conjunction with the alternatives boutique

For the more complex and challenging demands, the direct involvement of boutique professionals is possible. To illustrate, recent examples include:

INVESTMENT OPPORTUNITY IN INVESTMENT - GRADE CREDIT AND CONVERTIBLES

Working with the Mercer directors of consulting (DoCs), we highlighted the opportunities present in both markets as a tactical investment. This was a global effort in which the DoCs worked with field consultants to inform our global client of our thinking. The researches across the globe assessed our A-rated list to determine which providers would be able to deliver a product we deemed suitable for our client base. Working with the final three managers, we helped design a pooled product that would serve our needs from a global perspective in a non-benchmark approach. We then proceeded to negotiate fees for both the pooled fund and segregated mandates.

LARGE GLOBAL INSURANCE COMPANY

The company had an in-house management team and wanted to allocate its US credit holdings to third-party providers. Working with our US research team, we highlighted six potential managers who we felt fitted their requirements. Mercer conducted due diligence with the client on all six managers before presenting our final recommendation to the client. This included transition advice and the reports the client had requested.

UK PENSION FUND

After a strategy review, the client decided to allocate a portion of its pension fund to a global high-yield manager. After completing due diligence on 12 managers across the globe, we recommended six managers to the client. We conducted onsite visits with the client on these managers before coming up with three finalists. Although it started out as a global high-yield search, given the stage in the cycle and different products that were uncovered in our research process, we worked with the client to present an alternative product that had a more absolute return feel that would give more downside protection for their capital. The client chose to adopt this approach.