Operational Due Diligence is becoming an increasingly critical part of the investment process as asset managers navigate evolving risks in a rapidly changing environment. From regulatory shifts and technological advancements to the growing complexity of private markets, investors must ensure they have a clear view of the operational resilience of the asset managers they work with.
In a recent episode of Critical Thinking, Manish Solanki, Head of Mercer Sentinel Group Europe, was joined by Tony Martinez, Head of Mercer Sentinel Americas, and Ashleigh McDowell, Principal at Mercer Sentinel Group, to explore why operational due diligence is more important for asset managers than ever before.
The conversation covers the impact of new regulations such as the Digital Operational Resilience Act, the growing role of AI and cybersecurity in investment operations, and how ODD is evolving to assess boutique and emerging managers in private markets.
Mercer and British International Investment (BII), the UK’s development finance institution and impact investor, recently launched a new initiative to help scale up climate finance in emerging markets and developing economies (EMDEs). As part of the £100m Mobilisation Facility launched by the UK Prime Minister, half has been ringfenced for asset manager proposals that can attract institutional investment.
BII is inviting managers across private equity, private debt, and infrastructure to design investment strategies that mobilise long-term capital into EMDEs while delivering large-scale climate impact. In partnership with Mercer, a rigorous evaluation process will shortlist up to three proposals for entry into BII’s Investment Committee process.
In a recent episode of Critical Thinking, Mercer spoke to BII to shine a light on the world of development finance institutions (DFIs), capital mobilisation, and how DFIs like BII this can open up new investment opportunities for institutional investors in EMDEs.
In this episode of Critical thinking, Michel Meert, European Consulting Leader for Endowments, Foundations and Family Offices, is joined by Marieke de Roo, European Sales Leader for Endowments, Foundations & Single-Family Offices, and Teena Jilka, Senior Investment Adviser to explore what’s top of mind for single-family offices over the next year and beyond. As inflation moves back toward target rates, the prospect of a soft landing seems increasingly likely. This shift in outlook is prompting investors — particularly single-family offices, which focus on long-term positioning — to consider what comes next.
Key takeaways include:
Next-generation infrastructure: The role of infrastructure has evolved beyond the traditional use in a portfolio as the range of assets that it captures is much broader. Areas such as EV charging networks and data centres have the potential to create a compelling opportunity for family offices with a relatively longer-term investment horizon.
Hedge funds as a potential driver of absolute return and diversification: As investors grapple with overconcentration in global equity markets, particularly the US, as well as heightened volatility, diversification is top of mind for family offices. Hedge funds may offer flexibility to capitalize on market volatility and market dislocation, which could make them potential alternatives to fixed income, given the higher for longer expected rate environment.
How family offices can structure their governance and investment processes: In this period of high volatility, having an investment committee with clear policies, guidelines, and risk tolerance levels is essential to help ensure disciplined decision making, focused on long-term objectives.
In this episode of Critical Thinking, Sinead Leahy, Co-Head of Cardano Advisory is joined by Nick Gibson, Managing Director, Cardano Advisory, and Dan Jackson, M&A Senior Principal at Mercer, to explore the key findings from our recent report, ‘Unlocking value and opportunities from UK pension funds – a private equity perspective’.
There has been a significant shift in the Defined Benefit (DB) landscape in recent years, with many schemes moving from a deficit position to surplus. Surveying over 100 private equity (PE) firms, we uncovered the opportunity for private equity to unlock value from UK pension funds.
Key takeaways include:
The M&A opportunity from better funded DB schemes: pension schemes moving from a deficit to surplus means that schemes are no longer a blocker to M&A activity but rather a potential value driver, making a target business more attractive. Moreover, better funded schemes may mean less regulatory involvement in a deal, and less risk of deal value leakage.
Investors are seeking to access surpluses: Companies can often access pension surpluses when a scheme is wound up via a transfer to an insurance company, however, the government recently announced upcoming reforms that are designed to facilitate the release of surpluses on an ongoing basis. Many companies are delaying insurer ‘buyouts’ to capture the potential upside, while some are already using surpluses to help fund their Defined Contribution (DC) schemes.
What can be done to channel more pension money into PE: While mature, closed DB schemes have reduced investments into illiquid assets such as Private Equity, there are potential opportunities for greater allocations into private capital across open DB schemes, Local Government Pension Schemes, and DC schemes. The upcoming UK Pension Schemes Bill may facilitate consolidation of these pension schemes, which is designed to incentivise them to invest in a broader set of assets, such as private capital. At the same time, greater trustee education and engagement between pension funds and the PE sector will be crucial to unlocking further investment.
Navigating the challenges of modern pension provision requires employers to effectively communicate and implement changes in pension plans while keeping employees' best interests at heart.
In this episode hosted by Mercer’s Tej Patel, Fiona Brown shares her own views on the evolving landscape of employer retirement offerings, based on her decades-long experience in the sector, most recently at Rolls Royce. Key insights include redesigning plans to make them future-fit, ensuring employees feel financially secure as they plan for retirement, and the role of employers in fostering trust.
In this episode of Critical thinking, Amit Popat, Global Head of Financial Institutions at Mercer, is joined by David Morrow, European Insurance Proposition Leader, and Stephanie Thomes, a Senior Investment Strategist in Mercer’s Insurance team, to explore Mercer’s outlook for insurers in 2025. This year’s paper reflects a transitional phase for the economy, defined by shifts in structural factors such as monetary policy, geopolitical uncertainty, and technological and regulatory innovation that requires a broader and longer perspective. These challenges will require thoughtful navigation, particularly for investors with a longer-term investment horizon, such as insurers.
Key takeaways include:
How investment risk can serve as a stabilising force for insurers: When underwriting results are under pressure from increased claims and reduced premium income, investment risk can be strategically advantageous because there’s limited correlation between economic cycles and underwriting cycles. While underwriting performance is influenced by market conditions and competitive dynamics, investment returns can provide a stabilizing effect.
What strategies insurers can adopt to navigate a challenging environment, where recent fluctuations in interest rates have affected bond-oriented portfolios: There is considerable uncertainty about the direction of travel for markets in general, so insurers should consider modelling how their portfolios would perform under various scenarios, and to increase diversification, within the confines of acceptable risk and regulatory capital constraints.
How the growing number of semi-liquid and evergreen fund structures in private markets is changing the landscape for insurers: As private markets continue to evolve to meet the news of their investor base, semi-liquid and evergreen funds make it easier for small investment teams to participate in private markets, making it easier to maintain a target percentage allocation, relieve some of the administrative and operational burden of re-ups, and can relieve blind pool risk.
In this first episode in French of the podcast "Critical thinking," host Matthieu Mougeot is joined by investment specialists Maud-Kelly Crapeau and Pierre Luc Gariépy to discuss the growing interest in private market co-investments and secondary investments. They highlight their shorter investment horizons and potential for quicker capital deployment compared to traditional primary funds. Zooming in on the unique roles these strategies play in enhancing portfolio diversification and aligning interests between investors and fund managers, they also address the specific risks associated with co-investments and secondaries, including the need for in-depth knowledge and robust due diligence processes.
The discussion touches on the increasing sophistication of investors in private markets and the regulatory impacts influencing investment decisions in some jurisdictions, particularly in France. The episode provides with insights on how investors can effectively allocate resources to these asset classes, stressing the importance of working with experienced asset managers to navigate the complexities of private market investments.
In this episode of Critical Thinking, Jo Holden, Global Head of Investment Research at Mercer, is joined by Nick White, Global Strategic Research Director, and Matthew Scott, Strategic Research Principal, to explore Mercer’s "Themes and opportunities 2025" paper, specifically focusing on this year’s theme, "Swing state." This concept reflects an economy in transition, driven by shifts in monetary policy, supply chain dynamics, and technological innovation. These forces require investors to adjust their strategies, embracing diversification and preparing for a broader range of scenarios.
Key takeaways include:
Citations:
As birth rates decline and our population ages, the ripple effects of this demographic transition are felt across all areas of our lives, from financial well-being, long-term health, caregiving, career trajectory and retirement planning.
In our latest episode, Haleh Nazeri, Longevity Lead at the World Economic Forum, joins Mercer’s Global DB Segment Leader, Graham Pearce, to unpack the Longevity Economy. Discover how employers could reshape their employee benefits and pension plans to support their workforce and have the potential to enhance financial resilience in response to this transformative trend.
Remarkable growth in the captive insurance space has been driven by a range of factors over the recent past – from an extended hard market to the expansion of risks requiring underwriting.
In our latest episode of Critical Thinking, we dive into the world of captive insurers as William Gibbons is joined by Ellen Charnley, President of Marsh Captive Solutions, and Chris Tschida, Head of US Insurance at Mercer.
Join Amit Popat, Eryn Bacewich and Joshua Zwick as they unpack the findings from our Mercer and Oliver Wyman 2024 Global Insurance Investment Survey in the latest episode of Critical Thinking.
They dive into the key investment themes, outlook and risks highlighted by the survey and assess the road ahead for insurance portfolios through the second half of the year.
Read the full survey report here.
Join us as Eimear Walsh, Head of Investments for Europe, takes you live to the Mercer Global Investment Forum in Dublin, where we dive deep into the world of Private Markets.
The growth of private markets presents a multitude of possibilities, but success can hinge on adaptability and the ability to seize the right opportunities. Navigating this arena requires agility, a keen eye for identifying the most promising prospects and the ability to thrive in a competitive environment.
In this episode, Eimear is joined by Mercer colleagues David Scopelliti and Michael Butler and together, they walk us through the opportunities in the private markets landscape and what it means for different types of investors.
Recent market experiences have highlighted the importance for insurers to construct robust portfolios that not only support their primary business, but also enable them to respond to evolving market risks and opportunities.
In this episode, Marieke de Roo is joined by Francesco Martorana, Chief Investment Officer at Generali and Mercer colleague David Morrow live from the Global Investment Forum in Dublin. Together they unpack what it means to build agile portfolios in today's insurance landscape and discuss how insurers can navigate the ever-changing market dynamics and seize potential opportunities.
Join us as Mark McNulty, Europe Wealth Leader, takes you live to the Mercer Global Investment Forum in Dublin to discuss the theme for this year’s Forum “An Age of Agility”.
In this episode, Mark is joined by Mercer colleagues, Garvan McCarthy and Jo Holden to explore the key findings from our recent Themes and Opportunities 2024 report and discuss the strategies and insights that could help investors in this age of agility.
In this episode, our host Mark McNulty, Europe Wealth Leader, takes you live to the Mercer Global Investment Forum in Dublin. Together with Rich Nuzum and Jo Holden, they explore the impact of misinformation and disinformation on the investment landscape.
Misinformation was identified as the number one risk in the World Economic Forum's Global Risks Report, making it a topic that demands our attention. Join us as we delve into the challenges of quantifying and assessing these risks in the investment sphere, especially in the face of rapidly evolving information flow and the integration of AI in investment processes.
In this episode, Texas Hemmaplardh, US Not-for-Profit Investment Leader is joined by Olaolu Aganga, US Chief Investment Officer and Shane Brereton, Senior Investment Consultant, Australia to discuss the critical issues facing endowment and foundation (E&F) investors around the world and share practical takeaways for E&Fs navigating the ever-changing investment landscape.
Together they also explore the challenges and opportunities that arise from the dynamic nature of long-term investing, including the impact of inflation on long-term investments, the role of private and unlisted assets in portfolio diversification and the importance of aligning investment objectives with changing market conditions.
Following the 2024 World Economic Forum in Davos, Pat Tomlinson, President at Mercer and Nick Studer, CEO of Oliver Wyman joined Amy Barnes, Head of Sustainability and Climate at Marsh, to unpack some of the key themes emerging on the ground.
They discuss why companies need to be more competitive in a more muted growth environment; how health access has become a priority topic for an increasing number of employers; and why companies need to think more about political risks going into 2024.
You can find all the reports mentioned in this podcast at Marsh McLennan’s website at www.marshmclennan.com
In the year since the previous COP in Egypt there has been little progress made in scaling adaptation.
To discuss, Amy Barnes, Head of Sustainability and Climate Change Strategy at Marsh is joined by James Crask Head of Strategic Risk Consulting at Marsh UK and Rob Bailey, Partner at Oliver Wyman, specializing in climate and sustainability.
Together they share insights into navigating the challenges and seizing possible opportunities presented by climate change. Also exploring how organizations can both build and embrace resilience by anticipating potential disruptions, quantifying risks, and developing response plans.
For more information about Marsh McLennan’s presence at COP28, contact the team at mercerinvestmentsolutions@mercer.com or visit https://www.marshmclennan.com/pages/COP28.html
Mercer is proud of its ESG commitments, which are reported by Marsh McLennan, as well as its responsible investment policy and TCFD report.
For further information, please visit www.mercer.com/investing-sustainably or www.marshmclennan.com/about/esg.html
In this episode Helga Birgden and Hill Gaston sat down with Debbie Fielder, Deputy Head of Clwyd Pension Fund to delve into the topic of transition.
Together, they explore the crucial role investors play in driving the transition to a net-zero economy and how they can effectively manage investment risks, seize opportunities, and seek to mitigate the impacts of climate change.
Read the full Transition today report here.
For more information about Marsh McLennan’s presence at COP28, visit the webpage here or contact the team at mercerinvestmentsolutions@mercer.com.
Mercer is proud of its ESG commitments, which are reported by Marsh McLennan, as well as its responsible investment policy and TCFD report.
For further information, please visit https://www.mercer.com/investing-sustainably or https://www.marshmclennan.com/about/esg.html
Our current long-term views on the world and the potential economic and social developments to watch out for fall into three themes:
In this episode, Jo Holden sits down with Nick White and Matt Scot to explore the themes and opportunities we believe investors should consider in 2024 and beyond.
Read the full report here.
In this episode David Morrow is joined by Tamsin Coleman and Niall Clifford to delve into the world of private credit and its growing interest among insurance companies in today's dynamic financial landscape.
Throughout, they explore the latest developments in the private credit market, discussing the potential opportunities for insurers within this asset class while also addressing the potential challenges they may face, including navigating regulatory intricacies, tackling operational complexities and integrating ESG principles.
In this episode, we delve into the world of Single Family Offices, each one a distinct entity with its own set of structures, objectives and internal dynamics. To explore, Paul Fleming is joined by Beth Johnson and Michel Meert, as they shed light on the challenges and opportunities that currently define the Single Family Office landscape.
The discussion includes the role of governance, succession planning and the ever-evolving landscape of long-term investment trends, including the adoption of impact-driven strategies.
In an era where people are living longer than ever before, it's crucial for businesses, governments, and individuals to rethink their strategies for planning for the later stages of life.
In this episode, we'll be delving into the concept of the longevity economy looking at three fundamental pillars: quality of life, purpose, and financial resilience, presented in the recent report "Living Longer, Better: Understanding Longevity Literacy," a collaborative effort between the World Economic Forum and Mercer.
To explore these insights, Graham Pearce is joined by Ramsey Alwin, President and CEO, the National Council on Aging, Haleh Nazeri, Longevity Lead at the World Economic Forum and Lin Shi, Global Consultant at Mercer seconded as a fellow to WEF.
In this episode the spotlight is on wealth management, particularly portfolio construction. Conor Power is joined by Marieke de Roo and Rebecca Jacques to explore a fundamental question: How can wealth managers design portfolios that yield better results for their clients?
Amid this exploration, a key theme emerges: resilience. While unconventional in portfolio discussions, recent years have seen a cascade of crises – from pandemics to inflation and geopolitical unrest. With this backdrop, we hold a core belief: imminent uncertainties demand preparedness. Wealth managers who infuse resilience into portfolios can navigate risks and seize opportunities ahead, listen to the full episode to find out how.
Transition, transformation and innovation are the three words top of mind when it comes to Impact Investing right now, but how can investors start to implement Impact Investing into their portfolios?
In this episode, Angelika Delen, Global Head of Impact Investing is joined by Silvia Ruprecht, Senior Policy Advisor at the Swiss Federal Office of Environment and Cara Williams Global, Head of ESG and Sustainability to explore.
Despite the challenging macroeconomic backdrop, there may be opportunities within Real Estate to gain exposure to trends shaping the future such as affordable housing.
Zeenat Patel, Alternative Investments Lead at Mercer is joined by Hannah Marshall, who is responsible for CBRE IM's Pan-European Residential Impact Strategies and Anne Koeman-Sharapova who leads Mercer’s efforts in Real Estate investment and Due Diligence in Europe and the UK to discuss.
Now, more than ever, investors are seeking to address systemic imbalances by increasing diversity within their organisations and boosting DEI with their investment portfolios.
To explore how both investors and managers are approaching this, Alexa Shanks, Head of Intermediary Relationships, Mercer UK is joined by Stephen Deane, Portfolio Manager and Partner at Skerryvore Asset Management and Terrance Jones, Manager Research, Mercer US to discuss.
Nature as an ESG theme is rising into prominence and the link between nature and investors’ climate strategies is becoming clearer.
In this episode, Andrew Lilley, Sustainable Investment Head, Continental Europe is joined by Kate Brett, Global Intellectual Capital Lead for Sustainable Investment and Sarika Goel, Head of Sustainable Investment Manager Research to explore the market developments and trends for nature as well as the possible actions for investors today.
2022 was not a year for bond investors - but with inflation beginning to roll over, a strong start to the year, and bonds now offering the levels of income we haven’t seen in 20 years, 2023 looks far more optimistic.
Aisling Doherty, Senior Fixed Income Portfolio Manager at Mercer, is joined by Ella Hoxha, Senior Investment Manager, Pictet Asset Management and Samantha Milner, Head of U.S. Liquid Credit, Ares Management to discuss the outlook across bond markets for the year ahead, and how best to position portfolios to take advantage of the income and returns on offer.
2022 will go down in history as unpredictable and unprecedented. It started with a lot of optimism, then geopolitical unrest began, inflation took off, markets sold off and the era of cheap money effectively ended.
To make sense of it all, Rachel Volynsky, CIO of Canada and Global Chair of Equities is joined by Rupert Watson, Head of Asset Allocation, Europe and Cameron Systermans, Head of Asset Allocation, Asia.
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