Institutional Market to Soar to $18T

The U.S. institutional market is projected to increase 36%, to $18 trillion, within the next five years.

Cerulli Associates defines the institutional market based on the identity of the end-client, classifying assets as institutional only when the asset manager’s end client is an institution.

The U.S. institutional market weathered two major bear markets following the tech bubble burst in 2000 and the more recent global financial crisis, yet the market has shown steady growth, said Michele Guiditta, associate director at Cerulli. “As of year-end 2011, the institutional market held $13.2 trillion in assets under management,” Guiditta said.

In the report, U.S. Institutional Markets 2012, Cerulli looks at the entire industry, summarizing trends and revealing opportunities and challenges the industry faces. The report also analyzes service and product strategies, as well as the implementation of effective sales strategies.

In the past two decades, according to Guiditta, defined contribution (DC) plans have begun replacing defined benefit plans (DB) in retirement vehicles. “With over $3.5 trillion in assets, private defined contribution (DC) is the largest U.S. institutional market,” Guiditta said.

“DC markets have grown faster than DB markets,”said John Hsu, senior analyst at Cerulli. “And we expect that trend to continue over the next five years. There is an opportunity for asset managers to continue to grow their assets in the 401(k) market, which comprises more than 90% of the corporate DC market by assets.”

Cerulli cites other opportunities with alternative products and investment consultants in the institutional market, as well as challenges asset managers face with endowments and foundations.

The report is available for purchase by contacting