The Markets January 18, 2013

Smaller Fund Managers Saw Strong Growth in 2012

In 2012, mutual fund managers small and large saw substantial net inflows to their bond and stock funds.

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The list of the fastest-growing managers in 2012 includes many small and midsize mutual fund managers. Each of the listed managers enjoying over $10 billion of net inflows during 2012 increased their flows from 2011, some more than doubling, according to Strategic Insight, an Asset International company.

Strategic Insight named the top five fastest-growing managers of actively managed stock and bond funds: DoubleLine Capital, which saw a flows rate of 129% in 2012; Brown Brothers Harriman (83%); Stone Harbor (53%); AQR Capital Management (51%); and Robert W. Baird & Co. (36%).

The top five fastest-growing managers of passively managed stock and bond funds are: ALPS Advisors Inc., with a flows rate of 109% last year; WisdomTree Asset (46%); Guggenheim Funds Advisors (42%); TIAA-CREF (36%); and JPMorgan Chase & Co. (29%).

“During 2012, fund managers across a wide range of strategies and size benefited from rapid expansion of their assets and clients’ relationship,” said Avi Nachmany, Strategic Insight’s director of research. “In 2013 we expect the range of participating managers to expand further as demand for equity funds increases.”

Emerging market bond and stock funds, nontraditional investment strategies, innovative income approaches and bond fund leadership were all common investment themes among the 10 fastest-growing managers. Managers of index mutual funds and index-based exchange-traded products (ETPs) benefited from dramatic expansion as their assets exceeded $2.5 trillion and net inflows topped $250 billion last year. About half of these annual flows were captured by Vanguard’s managed funds or ETFs, with significant gains also by BlackRock’s iShare unit and by State Street Global Advisors (SSgA).

A number of managers of target date strategies beyond the traditional major players experienced substantial growth over the year. “Fastest-growing target date managers in 2012 included JPMorgan, MFS and John Hancock,” said Bridget Bearden, head of Strategic Insight’s defined contribution and target date funds practice.