June 3, 2011
Buoyed in part by investors’ growing appetite for riskier assets, J.P. Morgan Asset Management captured the top money manager spot in real estate, infrastructure, currency (alpha strategies) and private equity, while also garnering top spots across several other categories, such as defined benefit, absolute return and overall alternatives, according to Pensions & Investments’ latest annual money manager survey released in May.
P&I’s rankings—which focused on total U.S. institutional tax-exempt assets—reflected institutional assets managed internally as well as in defined contribution channels—including indexed assets—and was not limited to institutional actively managed assets. For the study, P&I profiled 718 investment management firms—all of which completed a questionnaire whose responses were reflected in the results—but only profiled the 50 largest firms in print.
According to P&I, a growing appetite for risk in 2010 made the year a good one for managers of institutional assets, powered by strong gains in key market segments, such as commodities, infrastructure, real estate investment trusts, convertible securities and high-yield securities.
Alternatives Dominate in Top Rankings
J.P. Morgan had a strong showing in key alternative groups, such as private equity, where the firm—whose $10.4 billion in assets at the end of 2010 was up 34% from 2009—garnered a top spot out of 54 firms based on U.S. institutional tax-exempt assets.
In real estate equity, J.P. Morgan was once again named the top real estate manager out of 79 firms with $18.9 billion in U.S. institutional tax-exempt assets, an increase of 21% from 2009.
"I think the story is pretty straightforward. Investors saw value in the asset class. The green light went on in late 2009 and early 2010. Most of the focus was in the core space," said Joseph Azelby, New York-based managing director and head of the global real assets group at J.P. Morgan Asset Management. "We are really well positioned for those capital flows."
J.P. Morgan has one of the largest core commingled funds in the industry — Strategic Property Fund, with a net asset value of $13.5 billion as of March 31, 2011— "which weathered the storm as well as one could expect," Mr. Azelby said. The fund's net asset value dropped with the market, but the properties were "quick to recover."
In other categories, J.P. Morgan once again captured the top spot out of 12 firms as infrastructure manager, with U.S. institutional tax-exempt assets jumping 36% to $1.54 billion, according to P&I. "We continued to see strong interest in the infrastructure asset class. Long life assets with steady cash flows are something clients want more of," Mr. Azelby said.
The firm also retained its top ranking out of 10 firms as the largest currency manager for alpha strategies, with $6.2 billion in U.S. institutional tax-exempt assets under management.
Strong Rankings in Key Categories
Meanwhile, J.P. Morgan ranked highly in the following categories: overall alternatives, institutional client flows, fixed income and core/core+ strategies, defined benefit, absolute return, overlay, and U.S. REITs.
Overall, assets of the 500 biggest managers of U.S. institutional tax-exempt money jumped 11.2% to $11.42 trillion in 2010, just a half a percentage point off the prior year’s rebound from the global financial crisis and about $1 trillion short of the pre-crisis high reached at the end of 2007, according to P&I’s report.
The first installment of P&I’s report focused primarily on rankings of money managers based on U.S. institutional tax-exempt assets. The second half of P&I’s annual U.S. Top Money Managers report, which will be published on June 27, will provide additional rankings and details based on worldwide assets of the qualified respondents.
Past performance is not indicative of future results.