DFA, American Funds retain top spot – and most money – from advisers

Despite putting more money in mutual funds, advisers work with fewer fund managers; Pimco and BlackRock see declines

Jul 29, 2014 @ 2:23 pm

By Trevor Hunnicutt

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Wirehouse and registered investment advisers are working with a tighter circle of favored fund managers than in years past, according to Market Strategies International.

The research firm said Tuesday that advisers are putting 39% of their assets with a primary provider, up from 33% last year. And advisers are working with about 10 fund providers this year, compared with nearly 11 last year, on average.

The trend, which the report's author said was most pronounced among RIAs and wirehouse advisers, is driving assets to Dimensional Fund Advisors and American Funds, the fund families with the highest percentage of primary users.

Advisers' favorite fund managers
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Advisers' favorite fund managers

At the same time, firms like Pacific Investment Management Co. and BlackRock have seen their stars fall, according to the survey. The two were the only firms to see a decline in the proportion of advisers who see them as a primary provider.

Pimco has seen outflows over the last year as performance dipped in its flagship Total Return Fund (PTTAX), and former chief executive Mohamed A. El-Erian departed.

But the survey's results contradict a favorable assessment earlier this month by BlackRock president Robert S. Kapito. Mr. Kapito said the firm's market share "at some of the wirehouses ... has more than doubled over the last two years."

Russell Investments, Ivy Funds, American Century Funds, T. Rowe Price and Goldman Sachs all saw gains with advisers, according to the survey.

How advisers use funds varies widely, Market Strategies said. ETF users work with three providers, on average.

At the same time, advisers rely on between seven and 12 mutual fund providers, depending on their firm (RIAs use the least fund providers, while national firms including wirehouses use the most).

The results are based on an online survey conducted between February and April this year with 1,437 advisers who manage at least $5 million.

But the survey's results contradict a favorable assessment earlier this month by BlackRock president Robert S. Kapito. Mr. Kapito said the firm's market share "at some of the wirehouses ... has more than doubled over the last two years."

Russell Investments, Ivy Funds, American Century Funds, T. Rowe Price and Goldman Sachs all saw gains with advisers, according to the survey.

How advisers use funds varies widely, Market Strategies said. ETF users work with three providers, on average.

At the same time, advisers rely on between seven and 12 mutual fund providers, depending on their firm (RIAs use the least fund providers, while national firms including wirehouses use the most).

The results are based on an online survey conducted between February and April this year with 1,437 advisers who manage at least $5 million.

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