Worldwide indexed assets under management rose for the third consecutive year, reaching $14.57 trillion for money managers that participated in Pensions & Investments' annual survey. Over the year ended June 30, indexed assets increased 9%, up from $13.37 trillion.
By asset class, U.S. equities represented the largest share of worldwide indexed assets in both passive and enhanced index strategies, at $6.97 trillion, up 8.6% over the year.
"U.S. equities is dominating the number of inquiries we are getting for new passive mandates," said Chris Riley, partner and head of global equity manager research at Aon Hewitt Investment Consulting Inc., Chicago.
This is as the S&P 500 index posted returns of 8.22% for the year ended June 30.
"Unless something materially changes from a market perspective," Mr. Riley said, he expects U.S. equity mandates to continue to represent the lion's share of passive assets among investors.
While U.S. equity mandates dominated worldwide indexed assets managed by survey respondents, global equities experienced the fastest growth rate for the one-year and five-year periods. Worldwide indexed assets in global equities rose 19.2% to $1.46 trillion for the year and 106% for five years, up from $709.6 billion.
That occurred as the MSCI All Country World index returned 5.74% for the year and 6.16% for the five years ended June 30.
Christopher Philips, head of institutional advisory services at Vanguard Group Inc., Malvern, Pa., said the firm has seen some institutional investors pull back on allocations to U.S. equities this year.
"The question of the year has been, how much more can the U.S. equity market go up from here? There's been a reallocation from U.S. equities into global equities," Mr. Philips said of indexing trends.
In the survey, worldwide indexed assets in U.S. fixed income saw the second-largest percentage growth over the year, a 13% rise to $1.99 trillion.
Five-year AUM growth was even more pronounced within U.S. fixed income at 89.6%, while worldwide indexed assets in these strategies grew from $1.05 trillion as of June 30, 2014, survey data showed.
For the year ended June 30, the Bloomberg Barclays U.S. Aggregate Bond index returned 7.87%, while returns for the five-year period were 2.95%.
Among money managers' U.S. institutional tax-exempt clients, indexed assets grew 9% over the year to $4.68 trillion. Over the five-year period ended June 30, indexed assets managed for the institutional segment jumped 47.4%.
In the U.S. institutional tax-exempt universe, defined contribution plans represented the largest percentage of manager assets. Firms managed $2.44 trillion in indexed assets for U.S. DC plans, up 12.5% from last year and 69.1% from June 30, 2014.