US funds are making huge inroads to UK pension fund management, according to Charterhouse Securities...
US funds are making huge inroads to UK pension fund management, according to Charterhouse Securities.
In its May 2000 report, Themes in Global Fund Management, Charterhouse said larger managers have suffered as indexation and increasing recommendations of core and satellite portfolios by consultants take business away.
Its view is backed by a survey by consultants William Mercer, which found that, of the $538bn of UK pension assets controlled by the top 10 managers at 30 June 1999, overseas managers accounted for $250bn.
Charterhouse used the WM All Funds Universe to quantify the segregated pensions market, which represents over 75% of the UK industry by value with total assets of over £512bn. £1.7bn of new money was introduced to the market in 1999.
US-owned houses made further inroads into the industry with Fidelity, Goldman Sachs and JP Morgan all winning substantial new business.
At the same time, the level of concentration in the pensions industry continues to fall. In 1997 the five leading managers represented 64% of the funds managed by the leading 25 groups.
This fell to 62% in 1998 and 59% for 1999.
UK investment managers managed to increase their funds under management over the 1998-99 period but were outstripped by US counterparts in terms of growth rates in segregated funds under management.
Schroder Investment Management had £65.2bn under its supervision, up from £60.8 bn, Legal & General's funds under management rose 7.7% to £3.3bn and Mercury Asset Management had £72.8bn under management, up 9.1%.
Rothschild managed the biggest rise of all, increasing by 157% its pension assets under management to £3.6bn.
US firms posted stronger gains overall, however, with Fidelity's total funds managed rising 57.5% to £12.8bn while Goldman Sachs accounted for £25.5bn, up 27.1% from the previous year's figure of £20.1bn.
£300bn of liabilities
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