There's no broad trend behind the struggles that heavyweight firms are facing. Some, including Schroder Investment Management North America Inc., New York, and Putnam, have seen organizational or personnel changes that weighed on performance. Others, including CapGuardian and Bank of Ireland, have simply turned in tepid performance in recent years.
Even executives at firms that continue to deliver strong results said the markets have been fairly tricky to navigate. "There have been flat periods, when you can't make much money, mixed in with some big jumps," said David G. Tilles, Delaware International's managing director and chief investment officer. "If you just get slightly wrong-footed, you can be a long way behind," he said.
Delaware International had $25 billion in institutional money invested in international equities as of June 30, an increase of $4.1 billion from Dec. 31, according to Mr. Tilles. During that period, the benchmark FTSE All World Ex-U.S. index was up only 2.3% in dollar terms, he noted. According to PIPER data, the firm's International Value Equity strategy has outperformed its benchmark by an annualized 4.51 percentage points for the past three years.
With firms that could always be counted on to accept sizable new international equity mandates struggling — such as CapGuardian — consultants say it has become a bit more challenging to do international equity manager searches. "It is affecting us," as several of the firms that have struggled in recent years are "huge, with lots and lots of assets," said Michael Rosen, a principal with Angeles Investment Advisors, Santa Monica, Calif.
The growing list of international equity managers closing to new money presents yet another challenge for consultants. "If we do our due diligence and like a particular organization, we want to put our clients' money there," said Mr. Rosen. "We absolutely support" firms that stop taking new money to avoid diluting the returns of existing clients, but it's a double-edged sword for consultants, he said.
Capacity limitations are one factor contributing to the strong inflows that smaller firms are enjoying.
Mark Cone, an executive vice president and chief marketing officer Causeway Capital, said strong performance of the firm's International Value Equity portfolio has helped it garner $8.7 billion in assets in the three years since the company was launched, including $3.4 billion since January alone. But the fact that Causeway will cut off new investments at $10 billion to $12 billion is probably a contributing factor, as investors look to "get in before we close our doors," he said.
According to PIPER data, Causeway's International Value Equity strategy has outperformed its FTSE All World Ex.-U.S. benchmark by 784 basis points a year for the past three years.