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With a relative paucity of attractively priced assets available to long-term investors, European institutional investors are diverting their focus and resources to alternative assets, according to Mercer’s 2015 European Asset Allocation survey. The findings also show that the use of passive management of equity and bond holdings increased, suggesting that European investors increasingly prefer to seek returns from manager skill within alternative and unconstrained mandates, while harvesting cheap beta in core equity and bond portfolios. Mercer’s survey also found an increased focus on environmental, social, and governance (ESG) factors within the investment process amongst participating funds.