Multi-manager style big down under

Frank Russell Company has been named the largest global manager-of-managers in Cerulli Associates’ July 2002 report, The International Multimanager Marketplace.

The Cerulli Report is based on total assets under management as of 31 December 2001, as gathered from 19 manager-of-managers firms.

According to the report, Russell currently holds a 26% share of the US$260 billion global manager-of-managers market.

The report also states that the combined Australia and New Zealand marketplace is the world’s third largest for multi-manager products.

Cerulli says that "multi-manager products [including fund-of-funds] are one of the fastest-growing sub segments of the asset management industry."

In addition, it says that multi-manager assets under management globally totalled US$489 billion at year end 2001 and have grown at a compound annual growth rate (CAGR) of 15% since year end 1999. According to the report, "over the same period, mutual fund assets worldwide were nearly flat; and the global asset management industry grew at a stunted 3% CAGR."

"The strong growth in the multi-manager segment in the past three years is not surprising," said Frank Russell's chief executive and chairman Mike Phillips says. "The market environment has taught some tough lessons about risk and strategic diversification to individual and institutional investors alike. Investors everywhere are realising that having a single investment manager run your money is as strange as having a single stock in your portfolio."

According to Cerulli, non-US assets in manager-of-managers vehicles have grown at a four-year CAGR of 43% and Russell has a 34% share of non-US manager-of-managers assets.

"Australia and New Zealand represent the world’s third largest marketplace for multi-manager products," Cerulli says. "Multi-manager assets represent well over 10% of Australia’s managed fund industry, one of the highest such proportions in the world." Russell is Australia’s second largest manager-of-manager after local firm MLC.

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