The largest managers of mutual funds most used in defined contribution plans saw their boats floated in 2009 by a rising equity tide and resilient flows into products such as target-date retirement funds.
The top 25 money managers surveyed by Pensions & Investments reported a combined $1.369 trillion in defined contribution mutual fund assets as of Dec. 31, up 28% from the year before. In 2008, assets tumbled 27%.
Strong equity markets were the biggest factor behind that turnaround. For the latest year, the broad Russell 3000 U.S. equity market index jumped 28.34% and the Morgan Stanley Capital International Europe Australasia Far East benchmark soared 32.46%, while the Barclays Capital Aggregate bond index added 5.93%.
Despite that dramatic turnaround, P&I's top 10 rankings showed considerable stability, with the only change of note BlackRock Inc.'s move to seventh place from ninth place the year before, on the back of a 46% jump in assets to $34 billion.
Market-related gains and new investor flows — with gross DC mutual fund sales of $11 billion last year — accounted for the bulk of that pace-setting gain, although the company's acquisition of quantitative money management giant Barclays Global Investors from Barclays PLC contributed a bit as well, said Tom Skrobe, managing director and head of BlackRock's defined contribution business.
Otherwise, Fidelity Investments remained on top, with a 28% gain to $393 billion, followed again by Vanguard Group Inc., up 29% to $270 billion; Capital Research & Management, 36% higher at $216 billion; Pacific Investment Management Co., up 17% at $77 billion; T. Rowe Price Group, jumping 40% to $74 billion; and Hartford Financial, up 22% to $48 billion.
Amid BlackRock's ascension, meanwhile, Federated Investors Inc. dropped to eighth place from seventh despite a 14% gain, to $31 billion, while Wells Fargo slipped to ninth place, with a 15% increase to $29 billion. OppenheimerFunds remained in 10th place, up 9% to $20 billion.
Managers with a relatively heavy focus on equities enjoyed some of the strongest gains.
Having the biggest domestic and international equity offerings in the DC rankings helped Los Angeles-based Capital Research enjoy a relatively strong gain in assets last year, said spokesman Chuck Freadhoff. For the year, the company's American Funds Growth fund jumped 41% to $62.9 billion in defined contribution assets, while its American Funds EuroPacific Growth fund soared 51% to $51.8 billion.
But 2009's rebound in DC assets was caused by more than just equity markets, according to money management executives.
More than 20% of Malvern, Pa.,-based Vanguard's defined contribution assets are in money market and bond funds, so the company's gain in assets reflected solid new sales as well as strong markets, said Barbara Fallon-Walsh, a principal with Vanguard's institutional retirement plan services business.
The market turmoil of late 2008 and early 2009 suppressed plan sponsor search activity for new record keepers and other major changes to defined contribution programs, but Vanguard's DC-related mutual funds still enjoyed healthy last year, Ms. Fallon-Walsh said in an interview. She was unable to provide net flow numbers.
(To view a ranking of equity mutual funds' fi360 scores, click here.)
(To view equity mutual funds' fi360 scores ranked by alphabetical order, click here.)
(To view fixed income funds' fi360 scores, click here.)