Thursday, January 14, 2010
Van Eck, Manning & Napier and Matthews Asia Grew Faster in '09 Than Any Other Active Fund Managers
Reported by Patricia Kelly
Van Eck Global
, Manning & Napier
, and Matthews Asia Funds
outpaced other firms to top the list of the fastest-growing active fund managers in '09, reveals the latest report from research provider Strategic Insight
The report, which examines the legacy of 2009 and proffers predictions for 2010, forecasts that bond fund inflows -- which reached an all-time record of $396 billion last year –- will continue unabated and surpass the $300 billion mark in 2010. As inflows continue to ascend so too will the 'remarkable' growth witnessed by active fund managers continue, including smaller fund firms, many of whom grew over 50 percent this year, the report surmises.
“The large number of small fund firms on this list attest to the strength of boutiques, whose focus and strong sense of conviction for their strategies/philosophies often prove attractive to investors in times of uncertainty,” stated Avi Nachmany
, director of research at Strategic Insight.
Growth aside, funds managed by big fund firms like Pimco
, Wells Fargo
, and Eaton Vance
topped the lists of the most popular active managed funds in '09, with emerging markets funds basking in the glow of investor's affinity last year –- a trend Strategic Insight expects to continue.
Couple big fund firms' popularity with the allure of the ETF market and you arrive at Strategic Insight's other prediction for 2010: the unceasing growth of the ETF market, which the research provider anticipates will pass the $1 trillion asset milestone in 2011. (Separately, a BlackRock report released yesterday claimed
that global ETF assets have surpassed $1 trillion, with U.S. ETF assets accounting for $706 billion.)
“ETF growth is attracting more big-name players, such as PIMCO and Schwab, which in turn helps accelerate the growth of the ETF market,” stated Loren Fox
, senior research analyst at Strategic Insight.
These Strategic Insight predictions challenge recent reports and outlooks for 2010 that have served up a healthy dose of optimism but maintained that 2010 will not be a year in which records are broken.
Company Press Release
NEW YORK, NY – January 14, 2010 – Led by robust demand for income as cash yields remain near zero, US investors’ use of bond mutual funds reached record levels in 2009. Strategic Insight, a business intelligence provider to the fund industry, announced that full-year 2009 inflows to bond funds (including traditional mutual funds and ETFs) hit an *all-time record of $396 billion* – an impressive number considering bond and stock fund flows have never before topped $300 billion in one year. If funds underlying variable annuities are included, bond fund inflows hit $425 billion in 2009.
Altogether, long-term mutual funds (stock and bond funds and ETFs) saw total net inflows of $478 billion in 2009.
As the chart below makes clear, these flows were led by taxable bond funds (net inflows of $324 billion) and international equity funds (net inflows of $75 billion). A limited appetite for risk restrained demand for US equity funds in 2009, resulting in net inflows of just $6 billion.
Stock and bond mutual funds (including ETFs but excluding variable annuity funds) ended the year with $7.8 trillion in assets.
*Observations on 2009:
*Bond vs. stocks*: Bond fund inflows neared $430 billion in 2009. Stock fund flows, when excluding Emerging Markets, were only around $30 billion. While spiking stock prices worldwide are signaling economic recovery, investors in stock mutual funds remain cautious and ambivalent about the recovery.
*Emerging Markets vs. Developed Markets*: Emerging markets funds (diversified or single country) captured about $55 billion during 2009. Will interest in Emerging Markets be sustained in 2010?
*ETFs vs. traditional index funds*: ETFs (including ETNs) saw net inflows of $114 billion in 2009, down from $176 billion in 2008. Traditional index fund flows were less than half, at $54 billion, although up from $50 billion in 2008. See more on ETFs below.
*Fund performance*: The average investor in stock funds earned a 33.6% return in 2009, while the average bond fund investor earned 16.9%. These figures are asset-weighted, thus reflecting the experience of the average investor, not the “average fund.”
*Active fund managers with remarkable growth*: SI looked at active fund managers that saw large growth in terms of 2009 net inflows as a percentage of total assets at the start of 2009 (“organic growth”). We included management firms that started 2009 with $1 billion+ in assets, to exclude tiny players. _We found 15 firms that had organic growth of 50% or more in 2009_:
This list included many smaller fund firms, such as Van Eck, which saw success with its Global Hard Assets fund, Manning & Napier, which enjoyed big flows into its World Opportunities Fund, and Asian-investing specialist Matthews. “The large number of smaller fund firms on this list attest to the strength of boutiques, whose focus and strong sense of conviction for their strategies/philosophies often prove attractive to investors in times of uncertainty,” said Avi Nachmany, director of research at Strategic Insight.
*Most Popular Active Mutual Funds
The most popular actively managed mutual funds of 2009 displayed a wide range of investment styles, including emerging-markets funds and the largest mutual fund, PIMCO’s Total Return.
In 2009, ETFs (including ETNs) drew $114.4 billion in net inflows. The year ended with a bang, as ETFs took in $27.4 billion in December 2009, the largest monthly inflow to ETFs since the products drew $42.9 billion in December 2008. It was the third year in a row that ETF inflows have topped $100 billion, including $149 billion in net inflows in 2007 and a record $176 billion in net inflows in 2008.
Net flows into ETFs were led by flows into emerging markets equity ETFs, followed by gold ETFs, government bond ETFs, commodities ETFs and natural-resources companies ETFs.
U.S. ETFs ended the year with a record $785.3 billion in assets, invested in 893 different ETFs. That marked a dramatic rise from $613.2 billion in ETF assets at the end of 2007 and $535.2 billion in assets at the end of 2008.
Strategic Insight expects US ETF assets to hit the $900 billion mark in 2010, and hit the $1 trillion mark in 2011. “ETF growth is attracting more big-name players, such as PIMCO and Schwab, which in turn helps accelerate the growth of the ETF market,” said Loren Fox, senior research analyst at Strategic Insight.
With some $10 trillion+ of cash sitting on the sidelines – in bank accounts and money-market mutual funds – and earning near-zero yields, investors will continue to migrate into higher-yielding investments in 2010. The massive inflows into bond funds could continue, and SI believes they could again exceed $300 billion in total net inflows in 2010. However, if the economic recovery is stalled, bond fund inflows could possibly top their 2009 records.
Equity fund net inflows should slowly increase in 2010, with the 1-year anniversary of the market bottom in March serving as a trigger point. “Despite the dramatic gains in equity markets in 2009, investors are waiting for surer signs of economic and employment recovery before moving significantly back into stock mutual funds,” said SI’s Nachmany. Meanwhile, we expect continued higher allocations to international stock funds, as investor portfolios persistently grow more globally diversified – a trend supported that will be supported in the next few years by a weakening dollar.
/Now in its 24th year, Strategic Insight is a leading research firm for the mutual fund and wealth management industry, providing clients with in-depth studies, consultation, and electronic decision support systems. //Strategic Insight assists over 250 organizations worldwide, including the largest mutual fund management companies operating in the U.S. Managers of 90% of US mutual fund assets use SI’s Simfund database to track flows, assets, pricing and other metrics. For more information, visit our home at www.sionline.com
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