Separate Account, Collective Trust Assets Declined in Q209

Despite strong domestic-equity and sound fixed-income performance during the second quarter of 2009, hefty investor assets were cashed out of separate accounts and collective trusts entirely, according to Morningstar data.

Morningstar’s separate account and collective investment trust database shows that $49.8 billion flowed out of separate accounts and CITs during the second quarter.

A commentary from Steve Deutsch, director of the Separate Accounts/Collective Investment Trusts and Pensions, Endowments, and Foundations Database, said that although large-cap strategies posted solid returns between March and June, they tended to underperform the other major equity asset classes. Regardless of geography (United States and Foreign) and style (growth, blend, or value), large-cap equity separate account and collective trust assets declined significantly.

Assets also flowed to long- and short-term government and corporate fixed-income strategies, with only intermediate corporate duration allocations very strongly negative or somewhat hesitant. Money market and stable-value category outflows also reflect money being put to more productive, better-yielding strategies, Deutsch said.

The data indicate that boutique money managers were the outperformance in the second quarter, as the bulk of the outflows between March and June affected the top 10 money managers ($58 billion). “Firms that are strongly committed to index-based strategies—or were swept up in the continuing reorganization of Wall Street—also showed strong asset declines during the second quarter,” the commentary said.