Managed Solutions Assets Pass $3 Trillion, Up 140% Since Year End 2008

Tuesday, September 10, 2013

Contacts:  Joan Lensing – 484-883-1324


                                                            Newton Lamson – 212-751-6126


For Immediate Distribution

WASHINGTON, D.C., September 10, 2013 – The Money Management Institute (MMI), the national association representing the managed investment solutions (MS) and wealth management industry, today released MMI Central 3Q 2013, which provides a statistical overview of data and trends for the managed solutions industry for the second quarter of 2013.

Highlights of this edition include:

  • By the end of the second quarter, total MS assets had passed $3 trillion – which marked an all-time high – and were up nearly 140% from $1.3 trillion at the end of 2008. All segments of the MS market have experienced strong growth in the four-and-a-half years since the end of the financial crisis, signaling investor and advisor confidence in professionally managed solutions and their disciplined investment approach.

  • Over the same period, Rep as Portfolio Manager programs are up 230%, followed by Rep as Advisor with growth of over 190%, Mutual Fund Advisory at 150%, and SMA Advisory at 50%. UMA Advisory assets rose fivefold, but from a much smaller base than the other segments.    

  • During the volatile market environment of the second quarter, MS assets grew a modest 2%, or $59 billion. For the first six months of 2013, assets grew by $310 billion, about two-thirds of the increase for all of 2012.

  • Looking at MS asset growth by market segment, increases – given the 2% overall growth – were lower across the board during the second quarter. UMA Advisory had the largest asset growth of any segment – 4% compared to 8% in the prior quarter. Rep as Portfolio Manager ranked second with a 3% increase, down from 7%, followed by Mutual Fund Advisory at 2%, down from 8%, and SMA Advisory and Rep as Advisor, both at 1% and both down from 10%. Rep as Portfolio Manager continues to display momentum with one-year and three-year annualized growth rates of 31% and 34%, respectively.

  • Net MS industry flows slowed from $88 billion in the first quarter to $55 billion in the second quarter, but the six-month flows of $143 billion compare favorably with $184 billion of flows for all of 2012. Flows for the trailing one-year period were $234 billion compared to $220 billion at the close of first quarter 2013.

  • Mutual Fund Advisory had $19 billion in net flows during the second quarter, a modest 3% increase, and was the only segment to show an increase in flows over first quarter. Although Rep as Portfolio Manager experienced the largest decrease for the quarter, dropping to $11 billion in flows from $28 billion during the first quarter, it continued to have the largest trailing one-year net flows, some $70 billion. For the trailing twelve months, the market segment net flow leaders were Rep as Portfolio Manager at 30% followed by Mutual Fund Advisory, Rep as Advisor, SMA Advisory and UMA Advisory at 25%, 21%, 13%, and 10%, respectively.  

  • While not robust, the 2% growth rate of MS assets for the quarter again outpaced other industry segments with Money Market Funds up 0.4%, Long Term Mutual Funds down 1%, and ETFs down 2%. On a net flow basis, Long Term Mutual Funds – a $9.8 trillion market – had net outflows of $27 billion for the quarter and ETFs – a $1.4 trillion market – had net flows of $21 billion. This compares to the $55 billion in net flows for the $3 trillion MS market and $11 billion in net outflows for Money Market Funds.

  • Fixed income investments dropped from 45% of SMA assets at the close of the first quarter to 42% at the end of the second quarter while the share of domestic equity rose 4% to 40% – evidence of the growing apprehension about rising interest rates and the ongoing rotation back into equities. In a similar vein, there were aggregate second quarter net outflows of $41 billion from municipal and taxable bond mutual funds and combined inflows for the quarter of $33 billion into U.S. and international stock funds.

  • As it has for a number of years, Morgan Stanley Wealth Management continues to be the leading sponsor of MS programs with $627 billion in assets under management at the end of the second quarter, representing about 21% of industry assets. The other firms ranking in the top five are Bank of America Merrill Lynch, Wells Fargo, UBS Financial and Charles Schwab.  

  • Among money managers, BlackRock Financial Management leads the rankings with $54 billion in traditional SMA assets and an 8% market share, followed by Nuveen Investments, Legg Mason, Eaton Vance, and J.P. Morgan Investment Management.

  • SMA-related program types continue to evolve. In addition to UMA Advisory, dual contract programs, which permit advisors to sign clients up directly with money managers not on their firm’s approved list, are also on the rise, growing 5% for the quarter and 36% annualized over the past three years.

MMI Research Report Preview: Will Active ETFs Fuel the Next Stage of Growth?

In advance of an upcoming MMI research report, this issue of Central presents some initial findings from research utilizing data that examines the manner in which advisors are using ETFs. The data represents aggregate advisor-level information at several sponsors across a number of categories, among them: program type, asset class, and investment style. The analysis uses 11 months of sales and asset information through May 2013 to evaluate recent market trends.

While ETFs are clearly now a mainstream product used extensively by advisors, portfolio strategists and even mutual funds as underlying investments, over the past year both ETF sales and assets under management seem to have plateaued at an equilibrium point. ETFs represent roughly one-quarter of both net sales and assets under management (AUM) and mutual funds the remaining three-quarters of each.

As the full research report will show, advisors’ use of ETFs and mutual funds is more homogenous than was expected, and this equilibrium exists even when advisors are segmented by size. Overall, the data indicates that advisors have adopted ETFs to access certain index-oriented returns, but still find significant value in the active management delivered via mutual fund products. The research report explores in more depth the use of each product type and the different investment styles favored by advisors for each.

The report data also shows a higher level of sales and redemption activity in Rep as PM programs than in either Rep as Advisor or Home Office programs. This supports both qualitative and quantitative evidence that advisors who use Rep as PM programs are, on average, larger and more sophisticated and tend to be very active in their management of client portfolios.  

In tying all of the report’s findings together, the future role of active ETF management becomes apparent. As the data indicates, advisors value active management and the results it can deliver to their clients. As advisors have become more sophisticated with respect to ETFs, they want to be able to add value by dynamically managing the asset allocation in their clients’ portfolios. With an equilibrium reached between ETF and mutual fund usage for at least the moment, the interesting question is whether the pending introduction of active ETFs will fuel the next stage of ETF growth.  

MMI Central provides a detailed quantitative overview of the MS marketplace. The update includes sizing the marketplace and its underlying components – mutual fund advisory programs, traditional SMA programs, multi-discipline programs, ETF programs, and UMA platforms, as well as other advisory program types. It also ranks sponsor firms and asset managers across key segments of the industry and analyzes data and trends affecting both sponsor firms and asset managers. Finally, the publication highlights emerging themes and explores areas of special interest to MMI members.

About the Money Management Institute (MMI): Since 1997 MMI has been the leading voice for the global financial services organizations that provide advice and professionally-managed solutions to individual and institutional investors. Through industry advocacy, educational initiatives, regulatory affairs, data reporting and professional networking, MMI supports and advances the growth of advisory solutions. MMI members’ advice-driven investment solutions serve an evolving worldwide financial landscape and their organizations are committed to the highest standards of fiduciary responsibility and ethical conduct. For more information, visit

About Dover Financial Research (Dover): Dover is a boutique Boston-based research and consulting firm specializing in the financial services industry. The analysis, independent research and market intelligence that form the foundation of MMI Central are provided by Dover on behalf of MMI. For more information, visit