European managers see sharp drop in equity assets – IPE Top 400

GLOBAL - Leading asset managers saw total equity investments managed for European institutions decline by 16.9% in the past 12 months, with the overall exposure to stock markets down €280bn according to research conducted by IPE.

According to the IPE Top 400 Asset Managers 2012, available as a supplement with the June 2012 issue and in digital version, Asset managers were responsible for €5.4trn in European institutional assets at the end of 2011, down from €5.7trn at end-2010.

While investments in fixed income remained broadly stable, at €2.31trn across 252 asset managers providing breakdowns of their investments, both equity investments and other assets saw outflows responsible for the €600bn year-on-year decline.

Underlining the growing importance of fixed income despite ongoing concerns about sovereign debt, European institutional managers saw fixed income increase as a share of overall business by 5 percentage points, up from 40% in 2010.

Unsurprisingly, European institutional investors preferred to seek exposure to developed European sovereigns, despite concerns around Greece and more recently Spain, with €537bn in assets invested by managers in the region. Emerging market sovereign debt was the second most popular sub-class, nonetheless only accounting for €63bn in assets of the €715bn invested in sovereigns.

In stark contrast to sovereign debt, where North American government bonds accounted for less than 5% of investments, North American corporate paper accounted for 16% of all investment-grade bonds, with companies from developed European nations again by far the post popular investment choice, claiming over 60% of the €504bn asset managers oversaw.

In both instances, fixed income from the Asia-Pacific region remained a minor player, with investments in corporate and sovereign debt only coming in at €14bn of the combined €1.3trn. A further €1.09trn was invested in other fixed income assets, such as convertible bonds and securitised credit.

However, despite the significant changes on the European level, across all assets under management globally, the decline in equity was less noticeable.

Looking at the rankings of the leading 400 managers globally, BlackRock easily defended its dominant position as the world's largest asset manager, while the Netherlands' APG has become one of Europe's three biggest institutional asset managers, trailing only Legal & General Investment Management and BlackRock's continental business.

Global assets under management (AUM) for the 400 leading managers (Top 20 pictured below) was nearly flat year-on-year, with total assets at €36.32trn, up from €36.22trn in 2011. There was a steep increase in assets since 2009, when total AUM stood at €23.4trn, increasing to €29.1trn a year later.

The hundred largest managers accounted for well over four-fifths, or €30.7trn of the €36.32trn, in assets - with six companies now exceeding €1trn AUM due to a €119bn increase in funds at Allianz Global Investors-owned PIMCO.

However, the steep increase in assets for PIMCO stemmed mostly from non-European business, as it only rose four places to 14 in the ranking of largest European institutional managers. Due to a 13% increase in European assets at Amundi, AGI lost its place in the top five, trailing BlackRock, LGIM, APG and State Street Global Advisors, who rose one spot to claim fourth place.

Deutsche Asset Management, the umbrella group for DB Advisors, RREEF and several of the German bank's institutional and retail businesses, also slipped one place after seeing institutional assets in Europe fall by €10bn to €152bn, while Credit Suisse was able to hold its position rounding out the Top 10 behind BNP Paribas Investment Partners and Natixis Global Asset Management, despite assets declining €14bn year-on-year.

Alongside APG, PGGM Investments also climbed in the European ranking (Top 20 pictured below) - up three places over last year to 13 after assets increased nearly €12bn over the period. The asset manager, largely responsible for assets of the Dutch healthcare pension fund, now sees entry into the Top 10 possible if assets rose by the same amount next year. Aberdeen Asset Management retained its place at 11 despite a slight decline in funds, while Goldman Sachs Asset Management reported assets up 7%, replacing HSBC Global Asset Management at 12.

Readers wishing to order a hard copy of the IPE Top 400 Asset Managers 2012 or looking to request it in a digital or Excel format should contact Emma Morgan-Jones at morgan.jones@ipe.com.