EUROPE - Barclays Global Investors remains the world's biggest pension fund manager by assets, according to Mercer Investment Consulting latest European Pension Fund Managers' Guide.
BGI boasted US$147,864m (including pooled assets) in 2001. Deutsche Asset Management moved to 2nd position (2000:4th), replacing Merrill Lynch which dropped to fifth place. Legal & General takes 3rd place (2000:5th) while Credit Suisse has climbed from 18th place in 2000 to 4th in 2001, reflecting the acquisition of the Sun Life of Canada investment business.
Four of the top ten managers oversee significant amounts of index-tracking assets.
Julia Hobart, head of manager advisory at Mercer, said: The continuing uncertainty in equity markets has forced managers to rethink their business models. The game is now less dependent on pure asset growth and is more driven by product mix and profitability.
Many organisations are facing potentially radical changes in their business. While some early signs are emerging, we can expect a lot more change to come.
Equity market volatility has resulted in an increase in bond management. While equity mandates have increased by just 17% in 2001, bond mandates have grown by 52%, according to the research.
Property and hedge fund investment are all on the up. In the Netherlands, property investment has grown by 225% in the last three years. In the UK its has climbed by just over 100%. Hedge fund investment by pension funds has lagged behind private investment but is growing rapidly, and is most pronounced in Switzerland.
While hedge funds have high ‘recognition value’ with pension funds, the reality is that only very small amounts have been invested at this point, added Hobart.
The number of specialist mandates has grown by nearly two thirds in 5 years, and now represents 47% of all mandates. Most contracts cover specialist equity, but there has been a 50% rise in specialist bond mandates over the last year.
The introduction of the Euro led to an almost immediate switch from domestic to European bonds in the first two years and then a slow down in 2001. The reverse is true for the equivalent equity switch, with a shift away from the asset class accelerating in the last year.
Other findings included:
- The market share of non-domestic managers, particularly US-based managers, across Europe is now 8% compared to 2% five years ago. Of the top 20 managers of European pension funds, 15 were headquartered in the US. The Nordic region led the way for foreign manager use.- A slow-down in new product launches to an average 9.3, suggesting an attack by fund managers on costs.- M&A activity slowed sharply last year at an average 9% (2000 : 25%);- UBS, the biggest group in terms of global assets, now controls assets greater than every European economy, except Germany, at US$1.5trn in 2001.
Data was supplied by 180 fund managers from 18 countries, serving clients in 31 European countries, and covers 10,675 European mandates.
Copies of the guide are available from Linda Samuels on 020 7963 3361 or via email at [email protected]
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