Investment managers with strong capabilities in developed and emerging markets stocks, global equities, hedge funds and fund of hedge funds will be in most demand this year from retirement plans, endowments, foundations and other large investors, according to the 2010 Consultant Search Forecast, released yesterday.

Apparent dissatisfaction with incumbent managers was another key finding in the survey, said Yariv Itah, partner at Casey Quirk, & Associates, a management consulting firm which conducted the survey with eVestment Alliance, an investment information and analytic technology provider.

“Manager replacements dominated search activity, particularly in traditional asset classes,” according to Mr Itah. “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.”

Consultants surveyed said themes expected to drive manager search activity this year will include fears about inflation, which are prompting investors to consider new asset classes and concerns over pension liabilities hiking interest in liability-driven investment strategies.

In addition, consultants said they saw a need to shore up funding gaps, which is reviving appetite for hedge funds and a continued, rising demand for non-US securities.

The survey polled 70 leading investment consulting firms in the US and Canada responsible for almost $7 trillion in assets under advisement.