But Janus Capital Group, Denver, another firm tainted by the scandal, reported a 10.7% rise in assets to $151.4 billion during 2003. This increase in assets was the result of Janus' merger with Stillwell Financial in December 2002 and new client inflows at enhanced indexing specialist INTECH, said Neal Jenkins, company spokesman.
"We have seen some client losses as a result of industry events," he said, referring to the market-timing scandal. But those losses had been offset by the performance of the firm's recently acquired businesses, he added.
Limited merger and acquisition activity during 2003 created some changes in the top 50.
Northern Trust reported a 58.2% surge in assets under management to $478 billion in 2003, which saw the firm jump to 17 from 29 in 2002.
Part of this increase in assets came from the acquisition of Deutsche Asset's U.S. passive businesses, but the firm also had strong inflows in new quantitative business, manager-of-managers strategies, hedge funds of funds and short-duration fixed income, said Kevin Rochford, Northern Trust's managing director, global sales and client servicing.
The firm's increased capacity in indexed business and its ability to offer specialist higher-alpha strategies meant it benefited from the global move by institutional investors toward core and specialist asset allocation, he added.
Credit Agricole S.A., vaulted to 18th place from 56th after its acquisition of Credit Lyonnais, S.A. pushed its assets under management to $476 billion, a 176% increase. Both firms are based in Paris.
Minneapolis-based American Express Financial Corp.'s acquisition of Threadneedle Asset Management, London, from Zurich Financial saw the U.S. firm's assets jump 59.5% to $366 billion. It moved up the rankings to 27th from 44th.
While 2003 was the year of specialist and boutique money managers, many smaller firms will now be looking carefully at their internal operations to ensure they can sustain that meteoric growth in assets.
Watson Wyatt's Mr. Baker said he was not surprised by the surge in assets given to specialist managers.
"A number of high-quality investment teams have started to leave the big firms to set up their own boutiques and they often take their clients with them," he said. But whether these new firms will be able to survive is another issue. "These are startup companies and a vast majority of startups go bust," he warned.
Active equity manager Marathon Asset Management Ltd., London, saw assets under management almost double to $21.34 billion. The firm recently announced it was closed to new business, but company officials did not return calls by press time.
U.K. equity specialist Liontrust Asset Management, London, reported an 83.6% rise in assets to $6.8 billion following strong inflows from institutional and retail clients. The firm's large-cap U.K. equity strategy was popular with institutional clients from whom the firm attracted £1.2 billion ($2.19 billion) in new business. Most of these mandates are smaller than £200 million and reflect the way U.K. institutions are appointing specialist managers at the margins of their overall asset strategy, said Jonathan Harbottle, marketing director.
Officials are aware that the firm would reach capacity for managing U.K. equities around £7 billion and would cease to bid for new business at that point. "If we were to close our U.K. equity business then we would offer other asset classes, but we would not put our core competence at risk," said Nigel Legge, Liontrust chief executive.
Emerging markets was the best performing asset class last year and emerging markets managers posted stellar growth as a result, said Watson Wyatt's Mr. Baker.
Emerging Markets Investors Corp, Arlington Va., saw assets under management jump 122.5% to $9 billion and Genesis Investment Management Ltd., London, posted an 86.5% rise in assets to $6.9 billion.