Vanguard Group Inc. stretched its lead as the largest manager of U.S. defined contribution plan assets in Pensions & Investments' annual money manager survey.
Fidelity Investments remained in second, after losing the crown in 2013, but BlackRock Inc. is gaining on it.
Malvern, Pa.-based Vanguard reported $705.5 billion in U.S. institutional tax-exempt assets under management for defined contribution clients in 2014, a gain of 15% from year-end 2013, P&I survey data show.
Boston-based Fidelity recorded DC assets under management of $620.2 billion, up 1.3%, while third-place BlackRock, New York, had $584.8 billion in defined contribution AUM as of Dec. 31, rising 10% from 2013.
Overall, DC assets overseen by managers in P&I's universe rose 2.5%, to $5.35 trillion in 2014.
The stronger performance for Vanguard and BlackRock vs. Fidelity “has everything to do with passive management,” said Michael W. Kozemchak, managing director at Institutional Investment Consulting in Bloomfield Hills, Michigan.
“The momentum is in passive management,” he added. “Vanguard and BlackRock have done a solid job. Fidelity has been slow to the party in passive management.”
Vanguard's gains were due to a combination of market appreciation and greater interest by plan executives in target-date funds and indexed investing, said Martha King, managing director and head of Vanguard's institutional investor group.
Some “significant” new record-keeping contracts among large DC plans — and the providing of Vanguard investments to these clients — also contributed to the AUM gains, she said. The record-keeping wins were with plans of more than $1 billion in DC assets, she said, but declined to provide details or the names of new clients.
“There are increasing opportunities at the large end of the market,” said Ms. King, who in March succeeded Christopher McIsaac as head of the institutional investor group. Mr. McIsaac will become managing director of Vanguard's planning and development division, replacing Michael Miller, who will retire midyear.
One source of growth has been Vanguard Retirement Plan Access, a program for DC plans with assets of less than $20 million. Started in 2011, it covered more than 2,600 plans and approximately 127,000 participants by the end of last year — up from 1,400 plans and 60,000 participants for year-end 2013. AUM for this program reached $6.7 billion at year-end 2014.
BlackRock's 10% AUM advance reflected market appreciation, new business, an increase in target-date fund assets and an increase in index fund assets, said Anne Ackerley, managing director and head of BlackRock's U.S. and Canada defined contribution group. BlackRock achieved gains “across the board” among various DC-plan sizes, said Ms. Ackerley, declining to provide details.