Globe and Mail – Global fund managers believe equities will have a tougher time in 2006, lagging the double-digit gains many major global stock markets enjoyed in 2005, according to a new study.

The Mercer Investment Consulting survey also found that powerful pension funds plan to diversify to alternative investments such as hedge funds, commodities and infrastructure, over the course of the year in a bid to boost their returns.

“Hedge funds, for example, are not driven by what the markets are doing so it provides an opportunity to invest in something that will give you a different return pattern,” said Mercer’s Peter Muldowney. “When you combine all these things — equities and hedge funds — it just gives you better odds of doing well.”

In its annual Fearless Forecast, Mercer surveyed investment managers at 157 companies around the world who oversee more than $20-trillion (U.S.) in assets. They were asked for their global and regional views on the economy and capital markets.

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