In enhanced index strategies for U.S. institutional tax-exempt clients, BGI had the more dramatic growth, rising 46% to $106.5 billion at the end of 2003, compared with $73.1 billion as of June 30. SSgA's enhanced indexed strategies increased 15.8% to $17.6 billion at the end of 2003, compared with $15.2 billion as of June 30. SSgA ranked fourth by enhanced indexed assets, behind Dimensional Fund Advisors Inc., Santa Monica, Calif., with $24.7 billion, and Pacific Investment Management Co., Newport Beach, Calif., $22.1 billion.
Kathy Taylor, BGI's managing director of U.S. institutional business, said the dramatic increase in the firm's enhanced strategies was due not only to new accounts, but also to existing clients moving to enhanced from traditional indexing.
"It's the ‘new old' theme of clients trying to close their pension funding gap in a low-risk way," said Ms. Taylor. "There are generally fewer straight index mandates out there. People looked more in the enhanced category than in the pure index bucket."
But overall growth in enhanced indexed strategies slowed a bit in the second half of 2004, lagging passively managed indexed assets. Of the U.S. institutional tax-exempt assets managed by the 56 firms surveyed, enhanced indexing accounted for $332 billion as of Dec. 31, a 2.5% increase from $324.2 billion in enhanced indexing as of June 30. Passive strategies, by comparison, saw an increase of 26.9%, to $1.6 trillion as of Dec. 31, from $1.3 trillion as of June 30.
Several managers moved around in the rankings by U.S. institutional tax-exempt assets.
Merrill Lynch Investment Managers, Plainsboro, N.J., moved up three spots to number nine on the list of the largest U.S. institutional tax-exempt indexing managers, managing $24.7 billion as of Dec. 31, up 32.2% from $18.7 billion as of June 30, due to some key wins, according to Joe Fergus, director and product specialist for the quantitative team.
"Our team has been in place for the past four-and-a-half years," said Mr. Fergus. "We've gained credibility in the marketplace and had some key wins last year."
While the very largest managers for the most part retained their rankings, there was some dramatic growth farther down the line.
Goldman Sachs Asset Management, New York, reported $15 billion in U.S. institutional tax-exempt indexed assets as of Dec. 31, up 51.2% from $9.9 billion as of June 30. The increase is the result of $1.9 billion in new accounts, $1.3 billion in additional business from existing clients and the rest coming from reclassification of assets that had been reported as taxable assets, according to a spokeswoman. GSAM ranked 17th as of year-end 2003, up from 20th six months earlier.
The Clifton Group, Minneapolis, also rose three spots on the list, to 46, with a 64% increase in its U.S. institutional tax-exempt assets in indexed strategies, to $1.35 billion.
And Atlantic Asset Management LLC, Stamford, Conn., reported $548 million in U.S. institutional tax-exempt indexed assets as of Dec. 31, a 71% spike from $320 million six months earlier. The growth is attributable to a new $200 million client, a spokeswoman said. The firm now ranks at 51, up from 53.
While the vast majority of the managers surveyed experienced growth in the second half of 2003, some managers saw their total worldwide indexed assets dip.
Westridge Capital Management Inc., Santa Barbara, Calif., saw worldwide indexed assets rise 16% to $2.9 billion.
Of the 56 managers surveyed, only three reported decreases in their total worldwide indexed assets in the six months ended Dec. 31.
BlackRock Inc., New York, saw its total worldwide indexed assets fall 5% to $8.7 billion at the end of 2003, from $9.2 billion as of June 30; Fiduciary Asset Management LLC, St. Louis, down 6%, to $1.5 billion from $1.6 billion; and Lincoln Capital Fixed Income Management Co. LLC, Chicago, down 7.6% to $20.8 billion from $22.5 billion.
And while Credit Suisse Asset Management LLC, New York, saw an increase in total worldwide indexed assets, its U.S. institutional tax-exempt indexed assets under management fell to $184 million as of Dec. 31, an 83% decline from $1.1 billion as of June 30, attributed mostly to terminations following staff turnover and poor performance.