Overseas assets of U.S. tax-exempt institutional investors soared more than 30% in the year ended March 31.
Among the 50 largest managers of international and global mandates, assets rose 34%, to $882.6 billion, compared with $658 billion a year earlier.
Overall, the 180 firms in the Pensions & Investments directory of global and international money managers reported $1.032 trillion in U.S. institutional tax-exempt assets for international and global mandates. This is up 33% from the $775.5 billion reported by 187 managers last year.
In the 12 months, the Morgan Stanley Capital International Europe Australasia Far East index rose 25.4%; the MSCI World index, 22.2%; the Salomon non-U.S. World Government Bond index dropped 1.4% and the Salomon World Government Bond index dropped 0.2%.
Overall, the top 50 managers of international accounts for U.S. institutional tax-exempt clients rose 36.2% to $693.56 billion. When adjusted for market growth, however, assets increased only 13.3%. Among the top 50 managers of accounts benchmarked to a global index, assets overall grew 10.8% to $186.38 billion, but only 5.9% on a market-adjusted basis.
"It was a time of extraordinary growth for all of us," said John Grady, principal and head of sales and client services for State Street Global Advisors, Boston. SSgA held on to its No. 1 ranking, reporting $102.9 billion in international and global accounts as of March 31, an increase of 49%.
Indeed, U.S. pension funds had invested 11.3% of their total assets -- about $876 billion -- internationally in 1999, up from 10% a year earlier, according to a recent survey of 200 money managers by InterSec Research Corp., Stamford, Conn. About $212 billion of the increase came from market appreciation.
While SSgA retained its ranking from 1999's survey -- and Capital Guardian Trust Co., Los Angeles, held on to second place, with a 63% increase to $85.6 billion -- there were some notable changes among the top 10 managers.
Janus Capital Corp., Denver, leapfrogged all the way to rank sixth, from 23rd last year, with a 251% increase in assets to $31.6 billion.
According to Janus spokeswoman Jane Ingalls, Janus Worldwide and Janus Overseas funds have built up impressive long-term track records. In December 1998, Janus opened two funds that invest overseas: Janus Global Technology, which was up 211% at year-end 1999 and Global Life Sciences, which was up 61% for the same time period.
Because of their performance, those two funds along with Janus Worldwide, received tremendous inflows of capital during the end of 1999 and early 2000.
The inflows were so strong that all three funds, along with the Janus Olympus Fund, are now closed to new investors, she said.
Putnam Investments, Boston, jumped to fifth from 10th, with an 83% increase in assets, to $33.5 billion.
Putnam got 53 new clients, with $4.3 billion in assets, in the year ended March 31, according to Tom Lucey, senior managing director.
He described Putnam's investment approach as a "no excuses" style. "Whether it's value or growth favored by the market it doesn't matter," said Mr. Lucey. "We have a core strategy," which uses both top-down and bottom-up analysis in an approach that should perform well no matter what particular style is in favor.
Despite the sharp growth of many firms, there also were some notable declines in the rankings.
UBS Asset Management, Chicago, slipped to eighth place from fifth last year, with a 13% decline in assets, to $25.3 billion. With UBS' well-publicized performance problems and loss of clients in the past year, this is not surprising.
Diana Cohen, a spokeswoman for UBS, explained the downturn by pointing out, "we're an active fundamental price/value manager," which was not in favor last year.
She also said the firm was "impacted by overall changes a couple of large clients made in their overall investment policy and asset allocation."
Drop on technicality
Prudential Insurance Co., Newark, N.J., dropped to 26th place from ninth last year, but that was due to a reclassification as domestic assets of $10 billion in private placement investments, said spokesman Tim Biggs.
Schroder Investment Management, New York, fell to 13th place from seventh place, with a 9.6% decline in assets to $22 billion.
Last year, Bankers Trust Co. was sixth in the rankings, with $27.3 billion of assets. This year, following Bankers' acquisition by Deutsche Bank AG, and Deutsche's absorption of Morgan Grenfell Asset Management Ltd., the renamed Deutsche Asset Management ranks 10th, with $24.3 billion of assets.
After adding in Morgan Grenfell's $10.4 billion as of March 31, 1999, Deutsche's assets for the year ended March 31, 2000, fell 35.9%.
No one from Deutsche would comment on the numbers.
There were some smaller moves in the rankings as well.
BGI up one
Barclays Global Investors, San Francisco, came in third this year, swapping places with Morgan Stanley Dean Witter Investment Management, which slipped to fourth place, with only a 9% increase in assets, to $56.4 billion.
Barclays had a 42% increase in assets, to $62.6 billion.
"It's come from a combination of additional assets coming from existing clients adding more to international investments and reallocations from one manager to another," said Marcia Hayes, managing director at Barclays. "We captured a share of that business from existing clients and new clients."
She also pointed to Barclays' use of the MSCI All Country World index as one factor in its attracting new business. She said more pension funds are deciding to use the ACWI as their international benchmark because it includes emerging markets and Canada, which the EAFE does not.
J.P. Morgan Investment Management moved up a notch, to seventh place, with a 43% increase in assets to $28.8 billion.
"The international markets were very strong during that period," said Paul Quinsee, vice president, J.P. Morgan. "A decent chunk of our increase came from market appreciation."
He added that because the international markets were so strong, many investors have now reached their target allocations to those markets. "You still find people putting money into international, but it's slower than it was a year ago," he said.
Bank of Ireland Asset Management (U.S.) Ltd., Greenwich, Conn., made it into the top 10 this year, rising to ninth place from 11th place last year. It had a 45% increase in assets, to $24.4 billion.
President Denis Curran said the firm won 30 new accounts accounting for $2.3 billion in new assets.
"It's very much a function of people who've watched us for quite some time and hired us as much for style consistency as good performance," said Mr. Curran. He pointed out the bank has a group of experienced bottom-up stock pickers.
He quoted what he said was an old Irish expression -- "old dogs for the long road" -- to emphasize the importance of the experience of Bank of Ireland portfolio managers.