NU Online News Service, Nov. 22 10:19 a.m. – Financial Research Corp., Boston, today released a study that says that in spite of the challenges to asset growth in the separately managed account industry posed by difficult equity markets in the first nine months of this year, new people continued to invest in separately managed accounts.
Money Management Institute, Washington, is distributing the FRC study to its members this week.
According to the study, the industry added 330,000 new investors during 2002′s first nine months, and by year-end the industry will likely grow to more than 2 million total individual accounts.
Financial Research Corp. estimates that the number of individual accounts in the managed account industry grew 10.1% in 2002′s first quarter and 4.6% in the second quarter, representing a 15.1% increase in the number of investors participating in the accounts from year-end 2001 through June 30, 2002.
Financial Research Corp. projects that, as of Sept. 30, 2002, the total number of accounts was up more than 20% from year-end 2001.
The study also reveals that while the top-tier managers (more than $5 billion in assets under management) accounted for a majority of the new accounts added during 2002′s first six months, the mid- ($1-5 billion assets under management) and small-sized (less than $1 billion assets under management) managers were responsible for a surprising amount of new accounts, particularly considering the percentage of overall account assets they control.
In fact, mid- and small-sized firms are adding to their share of managed account investors while the largest managers are losing share, according to Money Management Institute.
Managers with more than $5 billion in assets under management control about 79.7% of industry assets, but added just 67.4% of net new accounts in 2002′s second quarter.
On the other hand, managers with less than $1 billion in assets under management currently manage only about 2% of industry assets, but accounted for more than 8% of the net new accounts in 2002′s second quarter.
Managers with between $1 and $5 billion in assets under management currently manage 18% of industry assets, but accounted for more than 24% of net new accounts in that period.