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Cerulli Global Report: Charities, Pensions Outpace Life Insurers' Demand for Alternative Investments

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As charity, endowment, and pension trustees become more sophisticated in their investment strategies, they are growing more demanding than ever of asset managers and consultants, says research firm Cerulli Associates in its July report focusing on global trends and data.

These trustees are outpacing their life insurance industry counterparts in their demand for alternative investments, according to Barbara Wall, editor of The Cerulli Edge–Global Edition.

According to the July issue of The Cerulli Edge–Global Edition, charity and endowment trustees are now more likely to put their money in absolute-return funds (more commonly known as hedge funds) as they seek alternatives to low-yielding fixed-income and money market funds. Absolute-return funds may include investments such as short sales, futures, options, derivatives, arbitrage, leverage, and unconventional assets.

“It may come as a surprise that charities are at the cutting edge, even beating the life industry to multi-asset strategies,” Wall said in a release. “In fact, many charities are harder task managers than life companies, demanding (but not always getting) absolute returns on an annual basis.”

Cerulli Associates is an asset management research firm based in Boston, London, and Singapore. In addition to its Global Edition, The Cerulli Edge group of publications includes editions covering the Asia-Pacific region, Europe, managed accounts, advisors, and retirement.

“Where once fixed-income and money market funds were the only game in town as far as charity and endowment trustees were concerned, absolute-return funds are making an appearance and attracting assets,” the Cerulli release says. “Expectations are wide-ranging, but many managers have yet to prove they can deliver.”

In addition, a continuing shift in the United Kingdom to defined contribution (DC) plans similar to 401(k) plans in the United States has led U.K. pension trustees to start asking asset managers more complex questions.

“Great attention has been focused on creating fit-for-purpose default funds,” according to the release from Cerulli Associates’ London office. “Another area for debate is guarantees. At the moment, guarantees are not common in Europe’s most rapidly developing DC market, the United Kingdom. However, U.K. fund providers say mechanisms that narrow outcomes may become part of the future DC landscape.”

Read a story about a report from the Insured Retirement Institute and Cerulli from the archives of


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