Barclays Global Investors is the world's largest money manager, topping the $2 trillion mark in worldwide assets under management for the first time, according to the Pensions & Investments/Watson Wyatt Worldwide annual ranking.
BGI reported a 14.6% increase at $2.08 trillion as of Dec. 31, 2007. State Street Global Advisors rose 13.2% to second from third place with $1.98 trillion, while Allianz Group regained its third-place position with a 14.6% hike to $1.96 trillion after having fallen to fifth place in the previous ranking.
Total assets under management for the P&I/Watson Wyatt World 500 ranking of the world's largest managers rose 8.9% in 2007, to $69.4 trillion, compared with an increase of 18.9% the previous year.
“On the surface, 2007 looks like a standard year — not great, but not bad,” said Craig Baker, senior investment consultant and global head of manager research at Watson Wyatt Worldwide, Reigate, England. “In reality, however, this masks some of the volatility that was seen.”
The boost in assets was largely powered by equity market performance in the first nine months of 2007, Mr. Baker said. Toward the end of the year, however, this trend started to reverse and, of course, has continued its downward trend into 2008. The Standard & Poor's 500 index, for example, returned 6.9% in the first half of 2007 but only 3.5% for the year.
The relative weakness of the dollar and outperformance of certain international stock markets against the United States lifted assets for managers operating overseas. The rate of pure asset growth in non-U.S. regions helped geographically diverse managers as well as some home-grown players in developing markets. Squeezed in between are established regional firms built on a mainly domestic client base. For example, London-based F&C Asset Management PLC has a mostly U.K. client base. In 2007, F&C fell to 89th place with $206.1 billion in assets under management from 80th place at year-end 2006 with $203.8 billion in assets.
“Most of the managers in the top 20 are pretty global, some more global than others,” Mr. Baker said in an interview. “Certainly this has been a big advantage in terms of pure asset growth.”
Assets under management for the top 20 managers increased by 5.6% in 2007, while their share as a percentage of total assets for all 500 firms fell to 37.5% from 38.7% a year earlier. The drop is due primarily to a methodology change in which only discretionary assets under management are considered. In previous years, such data were not separated from other assets under advisory agreements by some managers. The change also led to a sharp fall in ranking for several top managers — including Zurich-based UBS AG. After leading for seven years, UBS ranked 10th at year-end 2007 with $1.23 trillion. Credit Suisse Group, also based in Zurich, dropped 18 notches to 29th, with $614 billion in assets under management.
In a comparison of discretionary assets from 2006 to 2007, UBS' assets under management actually rose 16% from $1.05 trillion in 2006, according to data provided by UBS.