Mercer survey - De-risking through alternatives

The 2015 Mercer survey of European pension funds shows that the "great rotation" has not been between stocks and bonds but between risky beta and alpha. UK allocations have de-risked, but the process has been through cutting equity exposure and adding alternatives.

The survey data suggests that the search for yield has not occurred as expected. There has actually been a search for better risk adjusted return. In the old days, you could de-risk with bonds because you received carry through the yield. Without any yield, the cost of lowering risk is too high. In order to reduce the cost or expense of lower risk, investors have embraced alternatives. Investors may be looking for skill in alpha; however,  the real flood into alternatives may also be driven by a poor alternative in fixed income.