Strong returns by foreign equity markets, along with a diverse array of strategies to exploit those gains, drove significant growth for overseas accounts managers for the year ended March 31.
The 182 investment management firms in Pensions & Investments' directory of international and global managers reported a combined $6.06 trillion in assets managed for worldwide institutional clients as of March 31, up nearly 32% from $4.602 trillion the year before.
The jump comes at a time when international equity markets handily outperformed U.S. markets. The Morgan Stanley Capital International World index returned 18.6% for the year ended March 31, and the MSCI Europe Australasia Far East index gained 24.94% for the same period. In the U.S., the S&P 500 index returned 11.72% for the year ended March 31, while the Citigroup Non-U.S. World Government Bond index fell 4.8%.
Many managers also attributed the asset gains to institutional investors' insatiable demand for alpha, which fueled interest in non-U.S investment strategies such as global tactical asset allocation and international equities. Some managers also said they got more business from Canadian institutions after limits on foreign investment were lifted last year.
Among individual firms, Barclays Global Investors NA, San Francisco, maintained its No. 1 position with $623.9 billion in overseas assets managed for worldwide institutional clients as of March 31, up 19% from the year before. At No. 2, State Street Global Advisors, Boston, had $498.5 billion in overseas assets, up 24% from the previous year.
Rounding out the top five, Fidelity Investments, Boston, moved into third place from fourth last year with $258.5 billion in assets, up 49% for the year. AllianceBernstein Institutional Investment Management, New York, moved up a notch to fourth place this year, reporting $208.7 billion in assets, a 54% jump for the 12-month period. AIG Global Investment, New York, was fifth with $200.9 billion, an increase of nearly 17%.
Much of the top 50 managers' increase in worldwide institutional assets under management was driven by international accounts. Overall assets for the top 50 managers of international accounts totaled $3.5 trillion as of March 31, up 16% from the previous year. The top 50 managers' total assets in global accounts jumped 68% to $1.903 trillion for the same period.
Overall, the 182 managers surveyed had $1.83 trillion in U.S. institutional tax-exempt assets under management in overseas mandates, a 33% increase from the year before.