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Consultants
Inside Mercer’s deal to acquire Cardano U.K./Dutch retirement specialist expands Mercer’s capabilities while reinforcing its pension business A deal in Australia, one in the U.S., and now in the U.K.: Mercer’s planned acquisition of Cardano is the latest example of the consulting giant’s efforts to expand and add to its global outsourced CIO and defined contribution capabilities, bringing a wellrespected player on board in the process.
Mercer’s parent company Marsh McLennan on June 11 inked a deal to acquire U.K. and Dutch retirement specialist Cardano, a privately owned firm that’s been in operation for 24 years. Subject to regulatory approvals, the deal will close at the end of the year, and about 550 Cardano staff will join Mercer. Terms of the deal were not disclosed. “It’s tick, tick, tick in what we were
in its OCIO and solutions business — it’s the largest OCIO firm according to Pensions & Investments data, with $419.6 billion in OCIO assets as of Dec. 31 — “we’ve been getting demand for more implementation capability” from certain clients, he said. “So we’ve had this strategy of saying, well, we would really like to expand our toolkit to include some implementation capability in response to that client demand. … That was a key strategic pillar.” Last year, Mercer agreed to SEE MERCER ON PAGE 27 Arnold Adler
By SOPHIE BAKER
looking for and where we think Cardano (is) really strong,” said Phil Parkinson, head of retirement and investments at Mercer U.K., in an exclusive interview. “It expands our capability for clients and responds to … the demand that we’ve been seeing.” Cardano ticks boxes in terms of “doubling down on our … pensions heritage and making sure we are investing in that in terms of capability, good talent and certainly from our OCIO or solutions business,” Parkinson said. While Mercer has been successful
SPECIAL REPORT DC MANAGERS
AUM rebounds as passive strategies outpace active
GOOD FIT: The deal ticked all the boxes, according to Mercer’s Phil Parkinson.
Regulation
SEC loss in court sparks investor alarm
Assets increase 15.6% to $9.81 trillion, propelled by big gains in stocks, bonds
But decision against private funds rule hailed by industry
By ROBERT STEYER
By BRIAN CROCE
MORE ON DC MANAGERS
Defined contribution assets under management rebounded Manager assets in 2023 to $9.81 trillion, up 15.6% have shifted over time. over the year, propelled by stock Page 3 and bond market gains, accord- Despite a big year, ing to Pensions & Investments' target-date assets annual survey of DC retirement are still concentrated. plan asset managers. The record Page 14 is $10.13 trillion in 2021. Retirement advisers DC asset managers capital- are embracing AI. ized on the S&P 500 index ris- Page 18 ing 26.3% and the Bloomberg Data on the largest U.S. Aggregate Bond index managers begins on gaining 5.5% — a dramatic Page 14 change from 2022 when they dropped 18.1% and 13%, respectively. Index equity investments grew faster than actively
in 2021 to step down that pacing plan to $1 billion a year in commitments. The reasons behind the decision to lower exposure to private equity were twofold, he said. “One was actually private equity has not been exiting at the rate we assumed in our models,” said
Institutional investors seeking more transparency from private funds are dismayed with a federal appeals court’s decision to strike down a Securities and Exchange Commission rule that required increased disclosure from private fund advisers and prohibited certain fee arrangements. “We are disappointed in the decision, which sets back efforts to increase private fund transparency and comparability to fund investors on fees, expenses and performance,” said Amy Amy Borrus Borrus, executive director of the Council of Institutional Investors, in an email. CII, the Institutional Limited Partners Association and 11 public pension funds, including $325.9 billion California State Teachers’ Retirement System, West Sacramento, filed an amicus brief in December defending the SEC rule against a private fund industry challenge, arguing that private fund advisers hold outsized control of information and influence over the fund formation process, to the detriment of investors. The alternatives market does not require the type of regular
SEE ALASKA ON PAGE 26
SEE PRIVATE ON PAGE 24
FOLLOW THE MONEY:
Willis Towers Watson’s David O’Meara says fees play a major role in DC participants’ choice of passive assets.
SEE ASSETS ON PAGE 16
Pension Funds
Alaska Perm CIO: It’s time to raise private equity target By ROB KOZLOWSKI
IT’S FUNDAMENTAL(S): Marcus
Frampton says Alaska Permanent recently raised its PE target.
Marcus Frampton, CIO of the Alaska Permanent Fund Corp., Juneau, sees private equity fundamentals improving, which is leading to a return to a higher target allocation. Frampton said the $78.6 billion sovereign wealth fund’s board voted
at its May 30 meeting to raise its private equity target to 18% from 15%, and that followed several years of gradually lowering the target from its peak of 19%. He said in 2018, 2019 and 2020, APFC was committing about $2 billion a year to private equity and venture capital funds, and then decided
SOUND BITE SAN LUIS OBISPO COUNTY’S KATIE GIRARDI: ‘Not having a CIO mindset in the executive director position is like going out for a round of golf with only your driver — at some point, you’ll need the trusty putter.’ Page 26
Funds say no on Musk pay vote In a losing battle, pension funds voted mostly against Elon Musk’s pay package. Page 3