VALLEY FORGE, Pa. - Vanguard Group Inc. saw institutional assets increase 14.5% in the year ended March 31, with $10 billion in new investment mandates.
While most of the placements were from defined contribution plan sponsors, the firm is looking to increase its reach in the defined benefit marketplace.
Institutional assets at the Valley Forge manager climbed to $252 billion through March 31, up from $220 billion a year earlier.
In Pensions & Investments' annual survey of mutual funds most used in defined contribution plans, Vanguard was one of only two top 10 firms that saw assets actually increase in calendar 2001 (P&I, April 29). Gerard Mullane, principal and head of Vanguard's institutional investor group, said the firm brought in 20% more in new investment-only assets in calendar 2001 than in 2000. In the full-service defined contribution plan business, Vanguard also had a strong year, said Mr. Mullane, bringing in $15 billion in new assets and 150 new clients last year.
Strong start to 2002
This year, the full-service business is off a strong start, he added. Vanguard has had several big wins in the first quarter including Callaway Golf Co., Carlsbad to, Calif., a $100 million defined contribution plan; Hercules Inc., Wilmington, Del., a $500 million defined contribution plan; and Sunoco Inc., Philadelphia, a $1 billion defined contribution plan. All three are slated for June 30 conversions.
Julie Adamik, manager-employee benefits at Callaway Golf, said the company selected Vanguard because of their service platform, not their investment offerings. "We knew that no matter who we went with, we would get good funds," said Ms. Adamik. "So we chose the best service provider, then went out looking for the best funds," she said.
Callaway ended up selecting six Vanguard funds for the plan, including the Vanguard Balanced Index, Explorer, GNMA, 500 Index, PRIMECAP, and Equity Income funds.
About 95% of Vanguard's institutional assets are in defined contribution plans, with only about $12 billion in defined benefit plans. Mr. Mullane said they are looking to increase defined benefit assets by marketing to smaller and midsized pension funds that might find Vanguard's low-cost funds comparable on a cost basis to separate accounts.
"We are more actively calling on defined benefit plan sponsors, finding out where we can add value on the investment side," said Mr. Mullane.