The biggest 25 managers of mutual fund assets in defined contribution plans hit a high mark in 2004, with assets jumping nearly 18% to $1.1 trillion, according to new data collected by Pensions & Investments.
The backdrop of the mutual fund trading scandal was less pronounced in 2004, and investors returned to equity funds with the bull market. For the year ended Dec. 31, the Standard & Poor's 500 gained 10.9%, while the Russell 3000 index climbed nearly 12%.
"2004 seemed to be more back to normal," said Drew Taylor, vice president at Capital Research & Management Co., Los Angeles.
"Being an organization your could trust was advantageous in 2004," said Gerard Mullane, principal and director of institutional sales at the Vanguard Group Inc., Malvern, Pa.
Capital and Vanguard once again joined Fidelity Investments Inc., Boston, at the top of the defined contribution heap in 2004 with their combined share of assets among the top 25 at 64%.
For its part, Capital posted the biggest gain of the three, with a nearly 29% jump in defined contribution assets to $167.9 billion. Market leader Fidelity recorded an 11% gain to $354 billion, while Vanguard advanced 22.5% to $178.7 billion.
T. Rowe Price Group, Baltimore, maintained its No. 4 spot. It was the biggest percentage gainer overall in 2004, with assets jumping 92.5% to $80.2 billion in 2004. Charles Vieth, president of T. Rowe Price Retirement plan services attributed defined contribution asset growth to a "record year in sales." The firm saw a fourfold increase in sales of new DC plan assets, he said.
Wells Fargo & Co. moved up to the No. 5 position from No. 11 last year. Its assets jumped to $26.8 billion, up from nearly $16.3 billion last year. Putnam Investments, Inc., Boston, slipped one notch to sixth place. Its assets fell 15% to $26.3 billion from $31.1 billion the previous year. Pacific Investment Management Co., Newport Beach, Calif., held onto the No. 7 spot, with a 5% increase in assets to $25.2 billion. But PIMCO's increase was much more modest than the 16% gain recorded in 2003, as rising interest rates curbed enthusiasm for bond funds.
Rounding out the top 10 were Franklin Templeton Investments, San Mateo, Calif.;. Diversified Investment Advisors Inc., Purchase, N.Y.; and Janus Capital Management, Denver. Franklin Templeton's assets rose 34% to $22 billion and Diversified saw its assets grow 38% to $20.7 billion. Janus, which has been involved in several market-timing lawsuits, experienced a 28% decline, with assets at $19.8 billion. Janus officials did not respond to phone calls seeking comment.