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| Contact | Christopher L. Davis Executive Director (202) 347-3858 |
Jim Marren TorranceCo (212) 521-5210 |
Assets in Managed Accounts
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Washington, D.C., July 29, 2003 -- Assets held in separately managed accounts industry-wide totaled $442.86 billion at mid-year 2003, according to quarterly figures for account assets under management released today by The Money Management Institute (MMI). The mid-year total was up approximately 15 percent from the $384.86 billion recorded at the close of 2003’s first quarter. The figures are based on a survey of managed account sponsor firms conducted by the MMI, whose membership comprises the industry’s leading program sponsors as well as their selected professional portfolio management firms. Separately managed accounts (SMAs) are individual accounts offered by financial consultants utilizing a broad range of advisory services and are usually managed by professional, independent money managers using an asset-based fee structure. The MMI’s quarterly assets under management (AUM) figure is based on program totals reported by Merrill Lynch, Morgan Stanley, UBS, Prudential, and Smith Barney – the industry’s five market leading firms, which collectively hold approximately 70 percent of the overall market – in addition to totals reported to the MMI by a selection of smaller firms that represent a proxy for the remainder of the SMA industry. The MMI’s quarterly survey of industry AUM tracks growth in assets specifically in SMA programs under the direction of financial advisors associated with the industry-leading program sponsors as well as those with other firms industry-wide. “While rising asset values clearly played a role in the increase in industry AUM during the second quarter, the industry also has been distinguished by a relatively stable asset base during even the most volatile market periods of the last two years,” said Scott Sipple, senior vice president/managing director, Alliance Capital, who is a member of the MMI Board of Governors. “The continuity of our investor and asset base -- along with increasing investor acceptance of the SMA approach -- has provided a strong foundation for the long-term, favorable growth projections associated with the overall SMA market,” said Mr. Sipple. Data on Market Share and Distribution Patterns Show Increasing Impact of New Market Participants In addition to assembling the quarterly AUM data, MMI works with Financial Research Corp. (FRC), the nation’s leading full service research and consulting firm serving the financial services industry, on other data initiatives including quarterly analysis and reporting of market-wide asset growth and distribution trends. The latest FRC analysis, for the quarter ended March 31, 2003, illustrates an ongoing development: the SMA industry, while still dominated by a select group of distribution and asset management firms, is undergoing dynamic changes with new entrants continuing to gain incremental market share, particularly among the asset managers. During the 12-month period ended March 31, 2003, Tier II firms (separate account AUM between $1 billion and $5 billion) gained AUM market share of 5 percent and Tier III firms (AUM of less than $1 billion) gained market share of 0.87 percent, while Tier I asset managers – those with separate account AUM of more than $5 billion – experienced a 5.87 percent drop in AUM market share. During the 12-month period, Tier II and Tier III firms saw their market share of accounts rise by 5.11 percent and 1.93 percent, respectively, while Tier I firms saw their market share of accounts drop 7.05 percent. The asset shift to the smaller firms is partly attributable to increased adoption of SMAs by non-wirehouse broker dealers, according to Michael Evans, FRC vice president. Investment advisors to high net worth individuals typically utilize three asset managers for approximately 65 percent of their client base and, as a result, established SMA asset managers have dominated the business. However, asset managers that do not have a significant platform presence at the wirehouses are gaining SMA assets through alternative distribution channels, such as third party, and regional and bank broker dealers. Over the past 12 months, regional and bank broker dealers and third party platforms have combined to capture 1.61 percent in market share. The share represents incremental dollars, as each of the three channels also has experienced an increase in assets under management. “The successful efforts of non-wirehouse firms to build their separate account businesses are broadening the industry’s delivery base beyond the traditional wirehouse channel – a very positive industry development,” said Charles Widger, CEO & President, Brinker Capital, who is a member of the MMI Board of Governors. Brinker Capital is an independent investment consulting firm and provider of managed account and mutual fund services to financial advisors. “As more and more advisors become active and adept at offering separately managed accounts – and attract a larger share of client assets – the industry will be even better positioned for future growth,” said Mr. Widger. The shift of assets to Tier II and III firms also has been driven by new entrants with significant distribution resources, said Mr. Evans. Large mutual fund shops with huge wholesale forces have entered the separate account business and are beginning to pick up significant momentum. In addition to huge wholesale forces in the field marketing products, these mutual fund shops have established relationships with many of the largest separate account distributors. |
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