In Practice May 3, 2011

Smaller Managers See Faster Growth

Research from Strategic Insight, an Asset International company, found that 20 of the top 25 fastest growing fund firms had less than $5 billion in stock and bond fund assets under management as of March 2010.
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Smaller fund managers’ focused and specialized investment skills – and high-conviction philosophies – continue to garner tremendous appeal in certain areas of the marketplace, Strategic Insight (SI) concluded.  

 Fastest Growing Fund Managers 12 Months Ending March 2011*
 Stock and Bond Funds; Exc. VA Funds 
 Source: Strategic Insight Simfund    
       
 *Managers with at least $1 billion at the beginning of period 3/10, or if smaller, 
 with at least $1 billion of net inflows during the prior 12 months   
       
Rank Manager Name Assets $Billion  Flows Latest 12 Months to 3/11 
  3/10 3/11  $ Billion As % of Beginning Period Assets 
       
1 DoubleLine Capital 0.0 6.1  5.9 Not Meaningful 
2 Global X Mgmt 0.1 1.7  1.3 >100% 
3 Stone Harbor 0.6 1.7  1.1 >100% 
4 AQR Capital Mgmt 1.3 4.1  2.5 >100% 
5 ETF Securities USA 1.3 3.9  1.9 >100% 
6 Yacktman 3.0 7.2  3.5 >100% 
7 JPMorgan Chase (ETN) 1.0 2.6  1.2 >100% 
8 Intl Value Advs 5.0 11.7  5.5 >100% 
9 ALPS Advisors Inc 1.5 3.5  1.6 >100% 
10 Water Island Cap 1.2 2.4  1.2 96 
11 Pacific Heights 5.7 12.3  5.0 88 
12 First Tr Adv 5.0 10.5  4.1 83 
13 PRIMECAP Mgmt 1.9 3.9  1.4 72 
14 Cambiar 1.3 2.6  0.9 72 
15 Tortoise Cap Adv 1.5 4.0  1.0 68 
16 WisdomTree Asset 5.4 9.8  3.5 65 
17 Barclays Capital (ETN) 6.6 9.9  4.0 60 
18 Absolute Invest 2.5 4.0  1.4 58 
19 Osterweis Capital 1.9 3.3  1.1 55 
20 Driehaus Capital 2.8 4.7  1.5 53 
21 Credit Suisse 3.7 6.7  1.9 52 
22 Westchester 2.9 4.4  1.3 45 
23 Tocqueville 2.7 4.9  1.2 43 
24 Harding Loevner 2.5 3.9  1.0 43 
25 Abundance Tech 1.2 1.9  0.5 40 

Growing Managers Show Increased Equity Demand  

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Within roughly $56 billion of total net inflows garnered by this group of 25 managers over the 12 months ended March 2011, a large majority of such commitments were to equity funds. In fact, nearly one-half of this total ($27 billion) flowed into U.S. Equity funds, while International Equity funds attracted an additional $17 billion among Strategic Insight’s peer group over this period.  

SI said this breakdown of net flows in favor of equity funds runs in contrast to overall industry trends, where Taxable Bond funds have attracted over $200 billion of net inflows over the 12 months ended March 2011 – accounting for about 60% of the industry’s $340 billion of total net deposits.   

Among the group of the 25 fastest growing managers, bond funds accounted for just $11 billion of total net inflows. More than one-half of such bond fund deposits came via DoubleLine Capital – the top-growing manager over the 12 months ended March 2011. SI’s Simfund database, which has comprehensive mutual fund data going back more than 25 years, DoubleLine’s $5.9 billion of net inflows since the firm’s inception in April 2010 makes it the fastest-growing U.S. mutual fund manager ever during its first year of operation (based on the amount of money raised from investors in the first 12 months after launch of the manager’s first publicly offered fund).  

Many of the managers identified by the study focused on providing consistent Web posts, and frequent white papers, press releases and e-mails in order to communicate their investment philosophies in up and down markets.  

A number of the fastest-growing firms in Strategic Insight’s peer group specialize in ETFs (and exchange traded notes). In particular, strong net inflows to ETFs spurred each of Global X Management, ETF Securities USA, JP Morgan Chase and ALPS Advisors to rank within the top-10 fastest growing managers over the 12 months ended March 2011. 

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