Top funds grow assets by eight per cent in 2012

 
Michael Bow
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THE PILE of cash managed by the world’s biggest fund managers rose to near a pre-financial crisis peak last year, underscoring rapid change unfolding across the UK’s investing landscape.

The world’s 500 biggest managers looked after $68.3 trillion (£42.7 trillion) of other people’s money at the end of last year, a rise of over eight per cent and close to the 2007 high watermark of $69.4 trillion, according to figures from Towers Watson yesterday.

With surging equity inflows and roaring stock markets driving assets higher, the figures for this year are likely to surpass the 2007 record.

The encouraging figures come amid a swing back into fashion for equity mutual funds for investors in the UK, and a changing of the guard among the UK’s best-known equity fund managers.

Figures from the Investment Management Association have shown total equity flows amounted to £3.8bn in the third quarter, the highest since the year 2000.

However, in constants to this, some of the UK top equity managers have moved companies, leading to swathes of capital swishing around the market. Research from Barclays yesterday revealed the amount of cash pulled from funds when top managers departed.

Investors pulled nearly $1bn from Richard Buxton’s Schroders funds one month after he left to join rival Old Mutual while James Clunie’s exit from Scottish Widows Investment Partnership meanwhile saw $20m leave his fund the month he left.

“Key man risk is still very much a defining characteristic of the industry. The sample of funds we analyse show investors are very quick to pull their money on news of management change, leading in most cases to heavy front-loaded outflows,” Barclays analyst Toni Dang said.

TOP 10 INSIGHTS INTO THE EVOLVING LANDSCAPE

1 Equities were the best selling asset class for the sixth month in a row in the UK in September with £1.3bn more cash added. However, bond flows were a measly £99m.

2 In Europe, equities were the best selling asset class for the second month in a row last month, with $14bn of inflows in total. But bonds were flat.

3 Sterling corporate bond funds were the worst selling sector in September, losing £116m during the month.

4 High yield bonds funds are going great guns, however. The best-selling fund across all asset classes was Neuberger Berman’s High Yield Bond Fund last month.

5 Four of the top five selling funds year to date are bonds funds, with M&G and Pimco leading the pack.

6 While the UK has been increasing assets, Japan’s asset base has been shrinking. It saw a nine per cent decline in assets last year.

7 Bank-owned managers accounted for the majority of fund managers in the biggest 20 managers for 2012, up from eight to nine managers.

8 Only three of the biggest asset managers in the top 20 are owned by insurers. But three of the top five biggest UK managers are owned by insurers.

9 Schroders was the fastest growing UK fund manager last year, with Prudential – which owns M&G – the second fastest growing.

10 The growth of passive assets has consistently outflanked that of the average. Last year they grew 12.3 per cent against the average of 8.3 per cent.