Investment managers with strong capabilities in developed and emerging markets stocks, global equities, hedge funds and fund of hedge funds are in most demand this year from retirement plans, endowments, foundations and other large investors, according to a survey of investment consultants released Thursday.

The 2010 Consultant Search Forecast survey polled 70 leading investment consulting firms in the U.S. and Canada responsible for almost US$7 trillion in assets under advisement.

Consultants responding to this year’s survey, also predict increased focus from their clients on inflation-protected strategies in 2010.

In 2009, consultants placed approximately US$378 billion with investment managers on behalf of their clients, according to the survey.

Strategies that were most in demand in 2009 from U.S. and Canadian institutional investors were international and global equities, domestic stocks, and core/core-plus fixed income.

This year, four key themes are expected to drive manager search activity:

• fears about inflation, which are prompting investors to consider new asset classes;

• concerns over pension liabilities hiking interest in liability-driven investment strategies;

• a need to shore up funding gaps, which is reviving appetite for hedge funds; and

• a continued, rising demand for non-U.S. securities.

The poll was conducted jointly by eVestment Alliance, an Atlanta-based provider of investment information and analytic technology, and Casey, Quirk & Associates, a management consulting firm serving the global asset management industry,

“Another key finding in this year’s consultant survey is the apparent dissatisfaction with incumbent managers, as manager replacements dominated search activity particularly in traditional asset classes,” said Yariv Itah, partner at Casey Quirk.

“That will increase pressure on investment management organizations to think strategically about their strengths and weaknesses and to effectively manage their consultant and client relationships.”

IE