The top 50 managers of non-U.S. pension assets manage more than $1.217 trillion for non-U.S. pension funds, including at least $646 billion for U.K. schemes.
The managers included in Pensions & Investments' survey also run tax-exempt international or global investments for U.S. institutions.
Move to specialization
Part of the growth in the United Kingdom has been fueled by plan sponsors that have been looking to diversify their asset management programs. State Street Global Advisors, with $64.2 billion in non-U.S. pension assets as of March 31, has seen in Britain "real movement to specialist managers," said Nicholas Lopardo, president and chairman for the Boston-based State Street.
At the end of last year, State Street had close to $21 billion in U.K. pension assets, he said.
U.K. pension assets totaled $1.05 trillion as of Dec. 31, 1997, according to consultant Watson Wyatt Worldwide.
"The tradition has been to balanced mandates. Now, plan sponsors are selecting" active managers to run asset classes such as cash, real estate and gilts around core passive U.K. equity portfolios, he said.
But balanced funds are still running strong in the United Kingdom, with 70% to 75% of U.K. pension assets in balanced funds, said Philip Robinson, head of research, global asset study, for Watson Wyatt in London.
In 1998, the average balanced manager in the United Kingdom achieved returns of between 12% and 13%, Mr. Robinson said. In the same year Dutch balanced funds returned 14%, and Irish and U.S. balanced funds returned 20% and 15%, respectively.
At the end of 1997, 25% of assets in the United Kingdom went to specialist managers, he said. At the end of last year, only 1 percentage point more went to specialist managers. Watson Wyatt estimates that 30% of assets in the United Kingdom will be managed by specialist managers by 2002, he said.
Pension schemes with L1 billion ($1.6 billion) are leading the trend away from balanced mandates, he said.
Passive on upswing
He added that "the ascent of Barclays Global Investors shows ascent of passive management" worldwide.
BGI ranked third with $154.3 billion in non-U.S. pension assets under management, behind Schroder Investment Management, with close to $170 billion, and Merrill Lynch Mercury Asset Management, with almost $156 billion.
The top five listing was rounded out by Morgan Grenfell Asset Management Ltd. which had $82.4 billion in non-U.S. pension assets; and Phillips & Drew, which had $77.7 billion.