LONDON - Barclays Global Investors Ltd. remains Europe's largest money manager by assets under management. It was followed closely by Merrill Lynch Investment Management Ltd., which squeaked past Schroder Investment Management Ltd. to take second place in research published in May by William M. Mercer Ltd.
According to the European Pension Fund Managers Guide 2001/2, London-based BGI's segregated assets managed for European pension funds were worth $115 billion at the end of June 2000.
The semi-annual report estimated the total European pension fund market to be worth $3.9 trillion by the middle of last year, but a significant portion of this was not available to third-party managers because of the use of in-house asset managers, insurance arrangements and book-reserve systems.
$1.8 trillion available
The 172 managers in the guide ran $1.8 trillion of pension fund assets in both segregated and pooled accounts for European clients, which represented a "very significant portion of `available' pension fund monies," according to the report.
London-based MLIM had segregated assets worth $96.6 billion, while Schroders, also of London, had $93.1 billion.
Fidelity Investments International (Europe) Ltd., London, for the first time entered the rankings of the 20 largest managers in Europe with segregated assets under management worth $21.8 billion.
Capital International Ltd., London, continued its strong growth with segregated assets managed for European pension funds climbing to $21.2 billion at the end of June, up 56% from $13.6 billion a year earlier.
According to Julia Hobart, worldwide partner for William M. Mercer in London, strong merger and acquisition activity among managers has led to increased concentration.
By mid-2000, assets managed by the largest three firms were greater than the combined U.K. and French economies. This compares with the survey for 1998, when the combined assets managed by Europe's five largest asset managers also exceeded the economies of the two countries.
The survey found that U.S.-based managers had increased their presence in Europe over the two years ended June 30.
In that period, the use of passive managers stabilized in the United Kingdom, while the use of specialist mandates increased 31%. The shift to specialist mandates on the Continent, however, has been relatively slow, growing only 3% during the two years ended June 30.
The use of passive mandates increased across Europe to 4.1% from 3.6% of total pension fund assets, with strong growth in Belgium, Ireland, Spain and Switzerland where the use of passive mandates in all four countries grew 30% in the previous two years.
The United Kingdom saw pension assets increase to 91% of gross domestic product compared with 72% in 1998. Mercer estimated the U.K. pension market to be worth $1.4 billion at the end of June.
"The key point is the polarization between funded and unfunded Europe. The U.K. represents nearly 40% of Europe's total pension assets, while the four largest economies of continental Europe are just starting to address the funding issue," said Ms. Hobart.
The Netherlands saw the largest growth in pension assets with total assets at June 30 estimated to be worth $695 billion, compared with $558 billion in 1998. Denmark also saw pension assets grow markedly, jumping to $177 billion, which represented 100% of GDP at June 30, compared with 76% of GDP in 1998.
Findings in the report also confirmed the marked shift on mainland Europe from domestic to regional investment mandates within the eurozone. The use of domestic bond and domestic equity mandates fell 92% and 60%, respectively, over the two years ended June 30.
The move out of domestic government bonds was particularly marked in France and Germany with eurozone bonds representing 25% and 39%, respectively, of total pension assets in those countries.