It's no surprise to see
The Vanguard Group Inc. at the top of the list of fund companies in gross sales last year, but it says a lot about 2010 that Pacific Investment Management Co. LLC ranked among the highest in sales in each of the three adviser distribution channels: wirehouses, regional and independent broker-dealers, and RIAs.
“Pimco wouldn't have been on this list five years ago,” said Geoff Bobroff, president of Bobroff Consultants.
The firm ranked first in gross sales in the wirehouse channel, second place in the broker-dealer channel and seventh in the registered investment adviser channel, according to research conducted for
InvestmentNews by Fuse Research Network LLC.
Fuse estimated the gross sales of each firm using data from Morningstar Inc., subtracted sales from other distribution channels, factored in redemption rates, estimated the share of sales each firm derived from the adviser distribution channels and then ranked them accordingly.
The story of 2010 was fixed income, and Pimco saw the rewards of that trend. Pimco's Total Return Fund saw $25 billion in net sales in 2010. Similarly, Franklin Templeton Investments' Global Bond Fund saw $18 billion in net sales — allowing the firm to benefit from the rush to international and fixed income. The firm ranked third in the wirehouse and broker-dealer channels, and 10th in the RIA channel.
Despite $50 billion in outflows last year, American Funds ranked first in the broker-dealer channel, second in the wirehouse channel and ninth among RIAs.
The $966 billion fund company's rankings were so high because even with its outflows, it's a favorite of the broker community, said Neil Bathon, founder of Fuse. “I suspect its redemption rate was lower than the industry average,” he said. “I think those redemption rates were always there; it's just in the past, it was covered up by new money coming in.”
There were five other fund companies that ranked among the top 10 in gross sales across the three distribution channels:
Fidelity Investments, Pimco, iShares, Franklin Templeton and State Street Global Advisors.
Fidelity came in third in gross sales in the RIA channel, fifth in the broker-dealer channel and seventh in the wirehouse channel. “Fidelity has everything,” Mr. Bathon said. “There isn't a product that they don't have.”
EMPHASIS ON INTERNATIONAL
The strong performance of international funds helped boost sales at Fidelity and other fund shops last year. Fidelity's International Value Fund saw $4.5 billion in net sales last year. Similarly, Vanguard's Total International Stock Index Fund saw $22 billion in net sales.
“The overall equity allocation to international used to be 20% maximum, but now I see some advisory firms make it 35% to 50% of their equity portfolios,” Mr. Bathon said.
iShares and SSgA were leaders in gross sales because of the rising popularity of exchange-traded funds across all three distribution channels, he said.
While ETFs traditionally have been popular among RIAs, more broker-dealers and wirehouses are putting them in their wrap programs due to adviser demand, Mr. Bathon said. “The wirehouses have definitely embraced ETFs because they realize that if they are slow, advisers won't wait.”
Advisers have, on average, 6.2% of their portfolios in ETFs, according to kasina LLC. “That's going to vary according to channel,” said principal Lee Kowarski. On average, RIAs have 12.4% in ETFs, while wirehouse advisers have 7.5%.
Gross sales for iShares put the firm in second place in the RIA channel, fourth place in the broker-dealer channel and fifth place in the wirehouse channel.
Similarly, SSgA ranked fifth in the RIA channel, sixth in the broker-dealer channel and ninth in the wirehouse channel, according to Fuse.
But even without its iShares subsidiary,
BlackRock Inc. was among the top 15 in gross sales across the three channels, ranking fourth in the wirehouse channel, eighth in the broker-dealer channel and 15th in the RIA channel.
BlackRock's best-selling fund was its Global Allocation Fund, which saw $9 billion in net sales in 2010, according to Fuse.
“Global-allocation funds did particularly well in 2010 because brokers could use them to ease clients back into the equity market,” Mr. Bathon said.
Some firms are starting to see progress penetrating distribution channels that they didn't traditionally target.
The most notable example of this is T. Rowe Price Group Inc., a no-load shop that has made substantial inroads in the broker-dealer channel.
The firm ranked sixth in gross sales in the RIA channel, 15th in the broker-dealer channel and 16th in the wirehouse channel.
“For them to be among the top 20 shows they are making a lot of progress among broker-dealers,” Mr. Bathon said.
E-mail Jessica Toonkel at [email protected].
