RESEARCH & EDUCATION

Since the real world is complex and dynamic, we pride ourselves on helping our clients constantly innovate and adapt to the ever-changing environment around them. We believe that asset allocation is the key to producing sustainable long-term results and we employ a valuation-based methodology to exploit medium-term market inefficiencies and improve risk-return trade-offs.

We also focus on identifying both proven and new managers as well as emerging trends. With over 110 research and investment professionals across the globe, we provide coverage on more than 5,130 managers of alternative and traditional investment strategies. We offer extensive research and thought leadership on a range of issues targeted to your needs. Our research is designed to be forward-looking and provide insights on market developments, industry issues and investment innovations.

We also take our research a step further by providing in-depth due diligence for clients desiring an additional perspective on manager back office operations. Our research is accessible through various formats including online and in-person events, including an industry-leading conference open only to non-profit industry professionals.

OUR INVESTMENT BELIEFS

Every investor has unique objectives. Our proprietary tools, breadth of experience, global scale and decades of experience will help you toward yours.

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MARKET UPDATES

Market Volatility Returns

Global equity markets have fallen sharply over the last few weeks and in particular the last few days. The losses have been most severe in European markets and most equity markets are now registering negative returns for the year as a whole. Bond yields in core bond markets have fallen sharply, with German 10year yields falling below 0.8%. After a long period of calm, volatility in equities and other asset classes has reached levels not seen since the height of the Eurozone debt crisis.

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SEC's New Rules for Money Market Funds

On July 23, 2014, the SEC issued a set of reforms for Money Market Funds. The rules have been amended to address risks of a run on MMFs, and are to be implemented in the next two years. These changes are only applicable to money market mutual funds regulated by Rule 2a-7 under the Investment Company Act of 1940.

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PUBLICATIONS – ENDOWMENTS AND FOUNDATIONS

Trilogy on Risk

Some aspects of risk can take a back seat when endowments and foundations (E&Fs) focus on comparing their performance to that of their peers. But E&Fs are exposed to many types of risk because of their high allocation to alternatives, their complex funding and spending structures, and diversity among their constituencies. We believe that we have an opportunity to redefine the concepts of return and risk in the E&F context.

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Challenging the Norm - Debunking the Spending Rule Convention

This paper explores the spending rules most commonly used to govern annual distributions from educational and community foundation endowments. We illustrate that the conventional rule of using a 3-year average of prior market values results in distributions that are more volatile from one year to the next than a 5-year/20-quarter average or certain hybrid rules. A spending rule that limits year-over-year volatility of distributions is beneficial and institutions should be able to tolerate more volatility in returns if they use a spending rule that limits the volatility in spending from the endowment.

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Endowments and Foundations Governance – Fiduciary Oversight and Implementation

Governance is an investment committee’s primary responsibility. Policy development and maintenance requires clear assignment of authority, knowledge of fund objectives, and deliberate consideration of risks. Implementation requires coordination of the technical aspects of money management within the policy framework.

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More publications can be found on www.mercer.us/services/investments/research-and-financial-markets

Mercer is a leading global provider of investment services, and offers customized guidance at every stage of the investment decision, risk management and investment monitoring process. We have been dedicated to meeting the needs of clients for more than 30 years, and we work with the fiduciaries of pension funds, foundations, endowments and other investors in some 35 countries. We assist with every aspect of institutional investing (and retail portfolios in some geographies), from strategy, structure and implementation to ongoing fiduciary management.