The largest asset managers got even larger in 1994 as tax-exempt institutional investors poured new money into major asset classes across the board, with real estate and fixed-income managers showing surprising gains.
The real estate growth found in Pensions & Investments' 1994 New Business Scoreboard stands out following several flat years. And, the healthy growth shown by large domestic fixed-income managers came during a major bear market in bonds.
Among individual managers, Bankers Trust Co., New York, still ranked in the top 10 in five of the eight major areas surveyed, despite its well-publicized troubles related to its derivatives trading and loss of key personnel in some areas.
Among firms with more than $10 billion under management, Bankers finished fourth in net dollar gain in new business for 1994, with $8 billion.
In 1993 Bankers ranked third, with $5.2 billion.
The top five managers with more than $10 billion in overall assets gained a whopping $57 billion in new business, compared with a gain among 1993's top five of only $25.6 billion.
While the response rate was light in 1994 for real estate managers, the trend that emerged is clear.
The top four real estate managers with assets of more than $10 billion had new business totaling $1.9 billion, compared with the gain by the top four real estate managers in 1993 of only $619 million.
Equitable Real Estate Investment Management Co., New York, topped the list of new business in both years, but had a gain of $1.5 billion in new real estate business in 1994 compared with only $370 million in 1993.
Equitable accounted for more than 76% of the four largest managers' total new business.
It was followed in 1994 by GE Investments, Stamford, Conn., with $346 million in new real estate business, and J.P. Morgan Investment Management Co., New York, with $109 million in new business.
"This simply reflects the fact that pension funds came back into real estate in 1994 after being out of the market for several years," said Jonathan Miller, senior vice president at Equitable.
"Investors in general and pension funds in particular had been looking for the market bottom and became more confident in 1994 that the bottom had been reached sometime in 1993, and became convinced that there was more upside in real estate and they came back in, especially given the fact that stocks and bonds were not that attractive for most of last year," said Mr. Miller.
The top five real estate managers in the $250 million to $1 billion range pulled in about the same amount of new business in 1994 ($1.22 billion) as in 1993 ($1.17 billion).
Koll Investment Management Co., Newport Beach, Calif., gained the most new real estate business in the $250 million to $1 billion category with $410 million, and was followed by CB Commercial Realty Advisors Inc., Los Angeles, with $262 million, and Metric Institutional Realty Advisors, Foster City, Calif., with $215 million.
Fixed-income money managers also seemed to gain a surprisingly large volume of new business in 1994 in view of the slide in the bond market and six interest rate boosts by the Federal Reserve Board.
The top five domestic fixed-income managers with more than $10 billion in total assets gained a total of $18.7 billion in new fixed-income business in 1994, compared with $7.6 billion for the top five managers in 1993.
Harris Investment Management Inc., Chicago, topped the 1994 list with $6.8 billion in new fixed-income business.
It was followed by Wells Fargo Nikko Investment Advisors, San Francisco, with $4.6 billion and Pacific Investment Management Co. with $3.2 billion. Standish, Ayer & Wood Inc., Boston, the top fixed-income manager in new business in 1993, slipped to fourth overall with $2.3 billion in new fixed-income business in 1994.
Guaranteed investment portfolio managers also gained new business at a torrid pace. The top five GIC managers gained $4.7 billion in 1994, compared with 4.5 billion in 1993.
Bankers Trust picked up the largest volume of new GIC business ($3.5 billion), followed by Fidelity Investments, $1.4 billion, and State Street Research & Management Co., Boston, with $723 million.
Eric Kirsch, vice president and manager of the stable value asset management group at Bankers Trust, said the portfolio consists of a mixture of traditional GICs and synthetic GICs. But, because the stable value group operates under the fixed-income umbrella at Bankers, "our style follows a more traditional fixed-income orientation."
"As the GIC market has become more sophisticated, things start to look more like a bond portfolio," said Mr. Kirsch.
"We look at the shape of the yield curve and manage the portfolio within a narrow duration band as dictated by the needs of the client," he said.
Bankers Trust has $12.5 billion in stable value assets under management.
Brinson Partners Inc., Chicago, a firm whose name has become ubiquitous in the international and global asset management category over the past three years, did not appear among the top firms in new international/global business in 1994.
However, Brinson did gain $835 million in new domestic equity business in 1994, enough to place the firm fifth among equity managers with $10 billion in total assets.
Fidelity Investments gained $14.8 billion in new domestic equity business, followed by State Street Global Advisors with $6.5 billion and Wells Fargo Nikko, with $1.1 billion.
Brinson also placed fifth among large managers in new domestic balanced assets, with $238 million.
Fidelity again topped the list with $803 million, followed by NBD Bank, Detroit, with $465 million and Bankers Trust with $402 million.
Certain asset classes were not heavily represented in the P&I survey, including specialty asset allocation managers.
One such firm, the Scarborough Group, Annapolis, Md., which provides asset allocation information and assistance to participants in 401(k) plans, pulled in $142 million in net new business in 1994.
Another specialty type manager - the Clifton Group Investment Management Co., Minneapolis, a derivative overlay firm - gained $183 million in that category in new business in 1994.
The international/global asset category continued its rapid expansion in 1994, with managers of all sizes experiencing healthy expansion.
Bankers Trust topped the list of managers with more than $10 billion under management by gaining $4.6 billion in new international and global management assets.
State Street Global Advisors was second, with $3.4 billion, and BEA Associates, New York, next, with $2 billion.
AMR Investment Services Inc., Fort Worth, Texas, jumped to second in net new business gains in the manager of managers category from sixth place in 1993, reporting a net gain of $291 million in 1994.
William F. Quinn, chief investment officer, said AMR's marketing efforts are starting to pay off for the firm.
"It's really a matter of getting people to know us better and to let them know about our style and our returns," said Mr. Quinn.
AMR Investment uses five managers in its domestic equity and balanced funds and three managers in its international equity fund.
AMR has $13 billion under management, with about $9 billion of that total being tax-exempt assets.