GLOBAL - Assets managed by the 500 largest pension fund managers in the world increased by 22% last year to a total US$43.3trn (e35.6trn), new research by global consulting firm Watson Wyatt has found.
The research, part of the firm’s World 500 ranking assessment, also revealed a reversal of a trend established during the past five years where bond managers comfortably outperformed their equity counterparts. While bond managers continued to fare well, it was managers with substantial equity allocations who saw the largest increase in assets.
Commenting on the findings, head of European investment consulting at Watson Wyatt, Nick Watts, said: “Three years of falling markets forced many managers to cut costs and streamline their businesses but market conditions during 2003 meant a reversal of fortunes for many asset managers, particularly at specialist houses.”
According to Watson Wyatt, specialist managers fared particularly well with UK specialist active equity houses noting growth of up to 96%. Leading “indexers” saw the total value of their assets increase by 38% during the year, driven in part by increasing inflows to “core passive” and by increasing interest in their enhanced indexation products.
Watts said a move by institutional investors from the balanced style of management towards a higher risk and return structure meant managers offering higher return products saw large increases in assets in 2003.
The top ranked fund manager by assets under management, as at December 31 2003 was Swiss manager UBS with US$1.78m. Germany’s Allianz Group came in second with US$1.33m and US companies Fidelity Investments and State Street Global third and fourth.
US managers dominated the ranking table, accounting for 11 of the top 20 organisations listed.
The concentration of assets showed little change from 2002 with the top 20 fund management firms accounting for 37% of the assets.
The continued depreciation of the US dollar against most world currencies contributed to high double-digit growth for non-US based managers in US$ terms. France, Italy, Netherlands and Spain increased market share due to the 20% gain in the euro while UK-based managers increased market share by 1% and Japanese managers saw market share fall by 1.2% despite a stronger yen.
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