Strong Markets in 2010 Help Top Asset Managers

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Pensions & Investments and Towers Watson World 500 Survey shows that market volatility and asset falls in 2011 highlight underlying risks

LONDON & NEW YORK--(BUSINESS WIRE)-- Assets managed by the world’s 500 largest fund managers rose by over 4% in 2010, to around US$65 trillion, continuing a trend from 2009, when assets rose 16% over the prior year. The Pensions & Investments/Towers Watson World 500 research also shows that despite the rises in assets in 2009 and 2010, they are still below 2007 levels of over US$69 trillion.

Craig Baker, global head of research at Towers Watson Investment, said, “2010 was another good year for most asset managers, with the majority posting strong results. However, developments in the second half of 2011 are an important reminder of the fragility and volatility of markets, and reflect the weak underlying economic fundamentals and the changing risk appetites among institutional investors.”

The research, conducted by Towers Watson (NYSE, NASDAQ: TW) in conjunction with Pensions & Investments, a leading U.S. investment newspaper, reveals that, by number, bank-owned asset managers continue to dominate the top 20, although the number of independent managers in the group grew. There are 11 U.S.-based investment managers in the top 20 managing 60% of these assets, while eight managers are European-based, and one is Japanese.

Baker added, “The 20 largest firms were the main beneficiaries of the rebound and increased their share of total assets to the highest levels since the research began. This was a result of good market returns, new inflows and performance fees, which, combined with reduced overheads, will have eased the pressure on asset management firms. While many would have moved back into profitability during 2010, recent market gyrations and the various sovereign debt crises could see these fortunes reversed in 2011.”

According to the research, asset managers from developing countries have more than doubled their share of total assets to around 4% during the past 10 years. During the same period, assets managed by the top 20 managers have almost doubled to around US$26 trillion and now account for around 40% of total assets.

“While currency movements have played a role in these trends, institutional investors are looking for exposure to new growth markets, resulting in significant inflows and performance for those managers that are well placed in these markets,” said Baker.

Since 2000, passive assets managed by the largest managers have grown by over 13% annually, compared to 6% annually for the top 500 managers as a whole during the same period. In 2010, passive assets managed by the largest managers grew by 9%, and the total value of assets under management exceeded US$8 trillion for the first time.

According to Baker: “Investors have continued to move significant assets to passive houses over the years as these institutions have found new ways to provide access to markets at low cost. Most investors still rely on actively managed assets as a core part of their portfolios to provide them with some of the additional return they need to repair deficits or grow in a low-beta-return environment. However, passive assets — including new ways of doing passive — are likely to continue growing, given their inherent appeal and suitability for the majority of investors.”

Some of the main gainers by rank in the top 50 (including through mergers or acquisitions) during the past five years include Great-West Lifeco (+43 [92 to 49]), BlackRock (+31 [32 to 1]), Affiliated Managers Group (+30 [80 to 50]), DZ Bank (+25 [69 to 44]) and BNP Paribas (+21 [29 to 8]).

Top 20 asset managers ranked by total global Assets Under Management — December 31, 2010

Rank	Manager	Market	Total assets
Rank	Manager	Market	(US$ millions)
1	BlackRock	U.S.	3,560,968
2	State Street Global	U.S.	2,010,447
3	Allianz Group	Germany	2,009,949
4	Fidelity Investments	U.S.	1,811,901
5	Vanguard Group	U.S.	1,764,960
6	Deutsche Bank	Germany	1,562,352
7	AXA Group	France	1,462,966
8	BNP Paribas	France	1,313,882
9	J.P. Morgan Chase	U.S.	1,303,372
10	Capital Group	U.S.	1,223,412
11	Bank of New York Mellon	U.S.	1,172,314
12	UBS	Switzerland	933,209
13	HSBC Holdings	U.K.	925,000
14	Amundi Asset Mgmt.	France	915,016
15	Goldman Sachs Group	U.S.	840,000
16	Prudential Financial	U.S.	784,046
17	Natixis	France	719,336
18	Legg Mason	U.S.	671,799
19	Franklin Templeton	U.S.	670,719
20	Nippon Life Insurance	Japan	656,153

Source: Pensions & Investments/Towers Watson Global 500 Survey

Towers Watson Investment

Towers Watson Investment is focused on creating financial value for the world’s leading institutional investors through its expertise in risk assessment, strategic asset allocation and investment manager selection. It is a division of Towers Watson’s Risk and Financial Services business, has over 700 associates worldwide and assets under advisory of over US$2 trillion.

About Towers Watson

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