the state of u.s. retail and institutional asset management

THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009

CERULLI QUANTITATIVE UPDATE SUBSCRIPTION

0

$1,000

$2,000

$3,000

$4,000

$5,000

Institutional-owned mutual funds

0

10%

20%

30%

40%

50%

Institutional ownership as % of total mutual fund assets

200820072006200520042003

Sample Exhibit: Institutional Ownership of Mutual Funds, 2003-22008

This report allows firms to:

• Critically examine business lines for expansion or contraction

• Determine if mutual fund alternatives are a threat to their business

• Understand the role of investment consultants

• Determine their place in an open-architecture environment

• Assess staffing levels by function and firm size

This report contains 172 exhibits and 213 pages. Itincludes the following chapters:

1. Asset Management Market Overview2. Asset Manager Addressable Marketplaces3. Asset Management Organizations4. Defined Benefit5. Defined Contribution6. Endowments and Foundations7. Subadvisory8. IRA9. Traditional Private Client Groups10. Mutual Funds11. ETFs12. Collective Investment Funds13. Managed Accounts14. Annuities15. Hedge Funds

Table of contents, user examples, and sampleexhibits are included in this attachment.

Report purchase includes:• 5 hardcopies• Online access• Exhibits in Excel format• Key findings in PDF format • PowerPoint presentation of highlights• Web recording of analyst presentation

For pricing, please contact:Marketing & Business [email protected]+1 617-437-0084

WWW.CERULLI.COM

Cerulli Associates Boston • Singapore • London

July 2009

New in 2009: Quantitative Updates arenow subscription-based and includeonline access to a database of priorannual releases of this report, relatedThematic Reports, and a data supple-ment updating select exhibits.

See page 3 for more details.

CAC e r u l l ia s s o c i a t e s

CERULLI QUANTITATIVE UPDATE

Retirement Markkets 2008

Total U.S. addressable assets fell 18.6% in 2008 to $23.3 trillion, signifying that the asset management industry has experienced lasting changes and maynever be the same. Now is the time to evaluate your business lines and determine if they make sense in this new environment.

This report examines all U.S. market segments, client types, and vehicles within the retail and institutional marketplaces. It looks at asset management busi-ness organizations and the major trends driving change in the dynamic business of asset gathering.

Key findings:• Institutional investors will be bigger holders of mutual funds by 2011 if current growth rates

persist

• Despite market turbulence, unified managed accounts (UMAs) experienced growth in 2008.

• The funds-of-funds market showed degree of resiliency in 2008, due to demand by DC plans for ready-made asset allocation strategies

• Third-party distribution continues to be the leading source in both retail and institutional markets.

• Private defined benefit is the most profitable institutional segment for asset managers—and trends indicate more asset turnover could be on the horizon.

Exclusive data:

• NEW: Collective investment trust assets, top managers, and fees

• U.S. market sizing and projections, 1998-2013E

• Retail and institutional marketplace profitability rankings

• Assets, flows, and key metrics by marketplace and investment vehicle

INSIDEINSIDE LOOK:LOOK:

Source: Cerulli Associates


CERULLI QUANTITATIVE UPDATE SUBSCRIPTIONCAC e r u l l ia s s o c i a t e s



USER EXAMPLES:

The following are examples of how this report can be applied to business planning and strategic decision-mmaking:

Scenario 1: A large mutual fund manager with a sizable U.S. investor base wants to benchmark the fortunes of its business in 2008, but is not sure howto best do so. They are unsure of the degree to which aggregate long-term mutual fund assets declined due to market performance and investors movinginto money markets, and want to know what products will be competing for these dislodged assets when investors rediscover an appetite for risk. CerulliQuantitative Uppdate: The State of U.S. Retail and Institutional Asset Management addresses these concerns by answering the following questions:

• Over the past 10 years, how have long-term open-end funds fared from asset and flow perspectives? (Exhibits 10.02, 10.03)• How much money went into money market funds in 2008? (Exhibit 10.06)• How big is the exchange-traded fund (ETF) market, by assets and by number of funds? (Exhibits 11.01, 11.05)

Scenario 2: A small institutional asset manager is seeking to expand its business and garner more attention from investment consultants. Until recently, ithas mostly sold directly to institutions and is unsure of how consultant-intermediated sales will affect its sales cycle. It is also uncertain as to what anappropriate level of consultant relations might be for a firm of their size. This report addresses these concerns by answering the following questions:

• How large are the addressable direct and third-party institutional markets? (Exhibit 2.11)• How long is the average sales cycle for institutional managers selling directly versus those selling through a third party? (Exhibit 3.11)• How do institutional managers staff their firms? (Exhibit 3.10)

Scenario 3: A mutual fund company with a strong defined contribution (DC) presence has been trying to gather information on the size and the growth ofthe collective investment fund (CIF) market. It is concerned that the low fees for CIFs will make them increasingly competitive with their products, andthey will lose marketshare as a result. This report addresses these concerns by answering the following questions:

• Which firms are the largest managers of collective investment funds? (Exhibit 12.02)• How are these products primarily invested? (Exhibit 12.03)• On an asset-weighted basis, what is the average basis point fee for an actively managed equity CIF mandate of $100 million? (Exhibit 12.05)

Scenario 4: A consulting firm providing advisory services to the financial services industry wants to know the true size of the entire U.S. asset manage-ment marketplace, and wants to understand the true toll of last year’s financial crisis from a high-level perspective. This report addresses these concernsby answering the following questions:

• How large is the U.S. asset management market when measured by traditional market sizing methods versus Cerulli’s model? (Exhibit 1.03)• In aggregate, how have the retail and institutional investors fared during this crisis? (Exhibit 2.01)• Which segments of the market have declined the most? The least? (Exhibit 1.04)• What are Cerulli’s projections for growth in these segments over the next five years? (Exhibit 1.08)

MORE INFORMATION:MORE INFORMATION:

To learn how to apply this reportto your firm’s unique needs,please contact:

Marketing & BusinessDevelopment +1 [email protected]

CERULLI ASSOCIATESOne Exeter PlazaBoston, MA 02116Tel: +1 617 437 0084

28 Maxwell RoadSingapore 069120Tel: +65 6327 4045

11-15 Betterton StreetLondon WC2H 9BPTel: +44 20 7470 8817

WWW.CERULLI.COM

NEW: Quantitative Updates are nowsubscription-based. Your purchaseincludes online access to a databaseof prior report releases, relatedThematic Reports, and a data sup-plement.

Special Featurre:To view a thumbnail view of the contents of this report, please visit our website at wwwwww..cceerruullllii..ccoomm..

Go to Reports and click on ‘view’ next to the report title.

Page 51

CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 200922 CHAPTER 1

As measured by traditional market sizing methods, total assets under management in the United States declined by $8.1 trillion in 2008, droppingfrom $39.6 trillion at year-end 2007 to $31.5 trillion at year-end 2008. This decline of 20.5% weighs heavily on calculations of the total asset managementmarket’s compound average growth rate (CAGR). From three- and five-year perspectives, the market’s CAGRs were 0.8% and 4.2%, respectively.

Analyst Note: This exhibit reflects the total asset management pool managed for U.S. retail and institutional investors as commonly presented (i.e., it has notbeen adjusted for double-counting or nonprofessionally managed assets).

Key Implication: Save for a select few, asset managers will want to forget the market crisis of 2008. Severe declines in asset levels translated for many firmsto a collapse in short-term profitability, and several companies that had for generations been household names in financial services disappeared, many of themdragged into the abyss by failed investment banking affiliates. While companies have recently begun to recover from these setbacks, many are unsure exactlyof the havoc wrought by last year’s declines and how to appropriately size the opportunity available to them going forward. Indeed, Cerulli analysts believe thetraditional all-in approach to market sizing grossly overstates the true opportunity available to managers, as it double-counts significant portions of the market.In the exhibits that follow, we illustrate the exact effect of this overstatement and how we believe it should be corrected.

$20,378

$23,729 $23,395$25,605

$28,394

$35,449

$39,630

$31,510

$21,968

$30,789

$23,776

16.4% 16.6%

-6.1%

-20.5%

11.8%

15.1%

8.4%

0.2%-1.6%

10.9%

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Assets Growth rate

EXHIBIT 1.01U.S. Market Sizing: Total Assets Under Management, 1998-2008($ billions)Source: Cerulli Associates

Page 22 Page 67 Page 194

CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009 CHAPTER 4 67

The state and local government DB segment is the largest subsection of DB plan assets, at an estimated $2.5 trillion at year-end 2008, accountingfor a 45.3% marketshare. Cerulli analysts expect this segment to remain the largest for some time to come as it persists as the primary plan structure forgovernment employees.

After several years of robust growth, corporate DB slipped 21.1% to just less than an estimated $2 trillion, down from $2.5 trillion in 2007. Themarketshare of this segment also declined, from 37.8% in 2007 to 36.3%.

Key Implication: State and local government plans, although often poorly funded, remain the primary retirement savings vehicles for government employees.This means that assets are likely to grow at a higher rate than the corporate DB market for the foreseeable future.

$1,937 $2,058 $1,986 $1,825 $1,665 $1,941 $2,106 $2,254 $2,442 $2,504$1,975

$2,031$2,326 $2,293

$2,207$1,931

$2,344$2,572

$2,721$3,050 $3,157

$2,464

$640$679 $699

$759$792

$830$872

$902

$935 $966

$996

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E 2008E

Federal DBState and local government DBPrivate DB

EXHIBIT 4.02Defined Benefit Assets by Subset, 1998-2008E($ billions)Sources: Department of Labor, Federal Reserve, EBRI, Cerulli Associates


Fixed annuity sales reached a record $109 billion in 2008, an increase of 50% from 2007. This marked the end of five consecutive years of decliningsales.

Analyst Note: Fixed annuity data in the above exhibit includes both traditional fixed annuities and fixed-indexed annuities.

Key Implication: Unexpectedly, the major driver of the phenomenal increase in fixed annuity sales was sales of traditional fixed annuities, which increased byan astounding 73% year-over-year (fixed-indexed annuity sales increased a modest 6% during this same period). CA analysts predict that the momentum fortraditional fixed annuities will carry over into mid-2009, at a minimum. Fixed annuity providers should capitalize on this resurgence of the product to developpositioning strategies so that the product becomes less reliant on underlying interest rates and known more for providing a guaranteed base for clients’ eventualretirement needs.

$36.5

$47.3

$67.8

$91.6

$75.4

$64.5

$52.2 $53.0$47.8

$82.9

$5.2 $5.4 $6.5$11.7 $14.0

$23.4$27.3 $25.3 $25.0 $26.5

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E

Traditional fixed annuity sales Fixed-indexed annuity sales

EXHIBIT 14.09Fixed Annuity Sales: Traditional and Fixed Indexed, 1999-2008E($ billions)Sources: NAVA, LIMRA International, Morningstar Direct, Cerulli Associates


Analyst Note: This exhibit illustrates the calculations for segmenting U.S. institutional client assets by distribution method.

Market Segment/VehicleTotal

Institutional Client Assets

Direct Distribution

Affiliated Distribution

Third-Party Distribution

Total Institutional

Client Assets

Direct Distribution



Total Institutional

Client Assets

Direct Distribution



Public defined benefit $2,344 $721 $38 $1,585 $2,572 $740 $41 $1,791 $2,721 $728 $44 $1,949Private defined contribution: 401(k) $1,607 $266 $835 $506 $1,872 $322 $942 $608 $2,087 $402 $970 $714Private defined benefit $1,941 $1,189 $31 $721 $2,106 $1,248 $34 $824 $2,254 $1,291 $36 $927Insurance general account $1,622 $340 $1,152 $129 $1,713 $384 $1,183 $146 $1,735 $424 $1,150 $161Short-term mutual funds $725 $725 $0 $0 $667 $667 $0 $0 $749 $749 $0 $0

Short-term mutual funds: S&L governments $63 $63 $0 $0 $67 $67 $0 $0 $72 $72 $0 $0Short-term mutual funds: non-financial corporations $299 $299 $0 $0 $324 $324 $0 $0 $367 $367 $0 $0

Short-term mutual funds: funding corporations $363 $363 $0 $0 $276 $276 $0 $0 $311 $311 $0 $0Federal defined benefit $830 $508 $13 $308 $872 $517 $14 $341 $902 $517 $14 $371403(b) plans $533 $53 $320 $160 $571 $57 $343 $171 $616 $62 $370 $185Foundations $477 $338 $13 $125 $511 $357 $14 $139 $551 $380 $16 $155Subadvisory: unaffiliated mutual funds $359 $231 $0 $128 $430 $272 $0 $157 $508 $317 $0 $191Private defined contribution: other $472 $78 $245 $149 $446 $77 $224 $145 $465 $90 $216 $159Endowments $231 $165 $6 $60 $267 $188 $7 $72 $298 $207 $8 $83Taft-Hartley $360 $236 $7 $117 $398 $261 $8 $129 $420 $275 $8 $136Subadvisory: unaffiliated variable annuities $287 $185 $0 $102 $321 $204 $0 $118 $361 $225 $0 $136Federal Thrift Savings $129 $129 $0 $0 $151 $151 $0 $0 $173 $173 $0 $0Long-term mutual funds $152 $152 $0 $0 $168 $168 $0 $0 $186 $186 $0 $0

Long-term mutual funds: S&L governments $26 $26 $0 $0 $28 $28 $0 $0 $30 $30 $0 $0Long-term mutual funds: non-financial corporations $126 $126 $0 $0 $141 $141 $0 $0 $156 $156 $0 $0

457 plans $117 $29 $53 $35 $130 $33 $59 $39 $143 $36 $64 $43Total $12,185 $5,346 $2,714 $4,125 $13,195 $5,646 $2,869 $4,681 $14,167 $6,060 $2,896 $5,211

2003 2004 2005

EXHIBIT 2.14 - PART 1Institutional Client Assets: Calculations, 2003-2005($ billions)Source: Cerulli Associates

Name: _________________________________________

Title: _________________________________________

Email: _________________________________________

Phone: _________________________________________

Firm: _________________________________________

Division or Business Unit Name: _______________________

_______________________________________________

Please contact me about this report. Fax completed form to +1 617-437-1268.


CERULLI QUANTITATIVE UPDATE SUBSCRIPTIONCAC e r u l l ia s s o c i a t e s



Report purchase includes:• 5 hardcopies• Online access• Exhibits in Excel format• Key findings in PDF format • PowerPoint presentation of

highlights• Web recording of analyst

presentation

A subscription to Cerulli Quantitative Uppdate: The State of U.S. Retail and Institutional AssetManagement 2009 remains active through 11/01/2010 and includes online access to the11 related reports below at no cost. See the green Purchase tab on www.cerulli.com formore information on these reports.

• Cerulli Quantitative Update: State of U.S. Retail and Institutional Asset Management 2008

• Cerulli Quantitative Update: Asset Manager Addressable Marketplaces 2007

• Institutional Sales and Relationship Management 2007

• Cerulli Quantitative Update: Asset Manager Addressable Marketplaces 2006

• U.S. Multiaffiliate Marketplace 2006

• Evaluating Asset Manager Addressable Marketplaces 2005

• Professional Buyers and Manager Selection 2005

• U.S. Subadvisory Marketplace 2004

• Asset Management: Institutional Sales & Marketing 2003

• Investment Consultants: A Strategic Outlook 2003

• Institutional Sales and Relationship Management 2003

Please contact Marketing & Business Development to learn more about pricing.+1 617-4437-00084

[email protected]

CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 20094 TABLE OF CONTENTS

TABLE OF CONTENTS - OVERVIEW

INTRODUCTION & METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12KEY THEMES & PROGNOSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

SECTION I: U.S. MARKET OVERVIEW

CHAPTER 1: U.S. ASSET MANAGEMENT MARKET OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21CHAPTER 2: THE ASSET MANAGER ADDRESSABLE MARKETPLACES (AMAM) DISTRIBUTION

MODEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35CHAPTER 3: U.S. ASSET MANAGEMENT ORGANIZATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

SECTION II: INSTITUTIONAL MARKETS

CHAPTER 4: DEFINED BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65CHAPTER 5: DEFINED CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77CHAPTER 6: ENDOWMENTS AND FOUNDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93CHAPTER 7: SUBADVISORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105

SECTION III: RETAIL MARKETS

CHAPTER 8: INDIVIDUAL RETIREMENT ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118CHAPTER 9: TRADITIONAL PRIVATE CLIENT GROUPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .127CHAPTER 10: MUTUAL FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139CHAPTER 11: EXCHANGE-TRADED FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158CHAPTER 12: COLLECTIVE INVESTMENT FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .166CHAPTER 13: MANAGED ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .176CHAPTER 14: ANNUITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185CHAPTER 15: HEDGE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .201

TABLE OF CONTENTS - EXPANDED

SECTION I: U.S. MARKET OVERVIEW

CHAPTER 1: U.S. ASSET MANAGEMENT MARKET OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21Exhibit 1.01. U.S. Market Sizing: Total Assets Under Management, 1998-2008 . . . . . . . . . . . . . .22Exhibit 1.02. U.S. Market Sizing: Total Addressable Assets Under Management, 1998-2008 . . . .23Exhibit 1.03. U.S. Market Sizing: Total and Addressable U.S. Assets Under Management,

1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24Exhibit 1.04. U.S. Market Sizing: Total Assets Under Management by Segment, 1998-2008 . . . .25Exhibit 1.05. U.S. Market Sizing: Double-Counting Adjustments, 1998-2008 . . . . . . . . . . . . . . . .26

table of contents

CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009 TABLE OF CONTENTS 5

Exhibit 1.06. U.S. Market Sizing: Asset Growth Rates by Segment, 1998-2008 . . . . . . . . . . . . . .27Exhibit 1.07. U.S. Market Sizing: Asset Marketshare by Segment, 1998-2008 . . . . . . . . . . . . . . .28Exhibit 1.08. U.S. Market Sizing Components and Projections, 1998-2013E . . . . . . . . . . . . . . . .29

KEY U.S. ASSET MANAGEMENT TREND: MUTUAL FUNDSExhibit 1.09. Ownership of U.S. Assets by Client Type, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . .30Exhibit 1.10. Institutional Ownership of Mutual Funds, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . .31Exhibit 1.11. Institutional Ownership of Mutual Funds by Marketplace, 2003-2008 . . . . . . . . . . .32Exhibit 1.12. Mutual Funds by Marketplace by Subset, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33Exhibit 1.13. Mutual Funds by Marketplace by Subset, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . .34

CHAPTER 2: THE ASSET MANAGER ADDRESSABLE MARKETPLACES (AMAM) DISTRIBUTIONMODEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

Exhibit 2.01. Retail and Institutional Client Assets, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . .36Exhibit 2.02. Marketshare of Retail and Institutional Client Assets, 2003-2008 . . . . . . . . . . . . . . .37Exhibit 2.03. Retail and Institutional Client Assets: Growth Rates, 2003-2008 . . . . . . . . . . . . . . .38Exhibit 2.04. Retail and Institutional Client Assets: Calculations, 2003-2005 . . . . . . . . . . . . . . . .39Exhibit 2.04. Retail and Institutional Client Assets: Calculations, 2006-2008 . . . . . . . . . . . . . . . .40

RETAIL CLIENT ASSETS BY DISTRIBUTION MODELExhibit 2.05. Retail Client Assets, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41Exhibit 2.06. Retail Client Assets by Distribution Method, 2003-2008 . . . . . . . . . . . . . . . . . . . . .42Exhibit 2.07. Marketshare of Retail Client Assets by Distribution Method, 2003-2008 . . . . . . . . .43Exhibit 2.08. Retail Client Assets: Growth Rates by Distribution Method, 2003-2008 . . . . . . . . .44Exhibit 2.09. Retail Client Assets: Calculations, 2003-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45Exhibit 2.09. Retail Client Assets: Calculations, 2006-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46

INSTITUTIONAL CLIENT ASSETS BY DISTRIBUTION MODELExhibit 2.10. Institutional Client Assets Under Professional Management, 2003-2008 . . . . . . . . .47Exhibit 2.11. Institutional Client Assets by Distribution Method, 2003-2008 . . . . . . . . . . . . . . . . .48Exhibit 2.12. Marketshare of Institutional Client Assets by Distribution Method, 2003-2008 . . . .49Exhibit 2.13. Asset Growth Rates: Institutional Client Assets by Distribution Method,

2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50Exhibit 2.14. Institutional Client Assets: Calculations, 2003-2005 . . . . . . . . . . . . . . . . . . . . . . . . .51Exhibit 2.14. Institutional Client Assets: Calculations, 2006-2008 . . . . . . . . . . . . . . . . . . . . . . . . .52

CHAPTER 3: U.S. ASSET MANAGEMENT ORGANIZATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53LEGACY AND GROWTH EXPECTATIONS

Exhibit 3.01. Survey Respondent Age of Business by Marketplace, 2009 . . . . . . . . . . . . . . . . . . .54Exhibit 3.02. Retail Manager: Historical and Expected Future Asset Bases by Distribution

Model, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55Exhibit 3.03. Institutional Manager: Historical and Expected Future Asset Bases by

Marketplace, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56


Exhibit 3.04. Retail Manager: Expected Future Asset Growth by Client/Product Type, 2009 . . . .57Exhibit 3.05. Institutional Manager: Expected Future Asset Growth by Client/Product

Type, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58PROFITABILITY RANKINGS

Exhibit 3.06. Retail Manager: Channel Profitability Rankings, 2009 . . . . . . . . . . . . . . . . . . . . . . .59Exhibit 3.07. Retail Manager: Third-Party Distributed Channel Profitability Rankings, 2009 . . . .60Exhibit 3.08. Institutional Manager: Channel Profitability Rankings, 2009 . . . . . . . . . . . . . . . . . .61

STAFFING AND INSTITUTIONAL SALESExhibit 3.09. Retail Manager: Personnel/Staffing by Firm Size, 2009 . . . . . . . . . . . . . . . . . . . . . .62Exhibit 3.10. Institutional Manager: Personnel/Staffing by Firm Size, 2009 . . . . . . . . . . . . . . . . .63Exhibit 3.11. Institutional Manager: Client Relation Duration and Sales Cycle, 2009 . . . . . . . . . .64

SECTION II: INSTITUTIONAL MARKETS

CHAPTER 4: DEFINED BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65Exhibit 4.01. Total Defined Benefit Assets and Growth, 1998-2008E . . . . . . . . . . . . . . . . . . . . . .66Exhibit 4.02. Defined Benefit Assets by Subset, 1998-2008E . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67Exhibit 4.03. Top Defined Benefit Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68

PRIVATE DEFINED BENEFITExhibit 4.04. Private Defined Benefit Assets and Growth, 1998-2008E . . . . . . . . . . . . . . . . . . . . .69Exhibit 4.05. Private Defined Benefit Net Flows, 1998-2008E . . . . . . . . . . . . . . . . . . . . . . . . . . . .70Exhibit 4.06. Private Defined Benefit: Plans and Participants, 1998-2007E . . . . . . . . . . . . . . . . . .71

PUBLIC DEFINED BENEFITExhibit 4.07. State and Local Government Defined Benefit Assets and Growth, 1998-2008E . . .72Exhibit 4.08. State and Local Government Defined Benefit Net Flows, 1998-2007 . . . . . . . . . . .73Exhibit 4.09. State and Local Government Defined Benefit: Systems and Participants,

1998-2007E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74FEDERAL DEFINED BENEFIT

Exhibit 4.10. Federal Defined Benefit Assets and Growth, 1998-2008E . . . . . . . . . . . . . . . . . . . .75Exhibit 4.11. Federal Defined Benefit Net Flows, 1998-2007E . . . . . . . . . . . . . . . . . . . . . . . . . . .76

CHAPTER 5: DEFINED CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77Exhibit 5.01. Total Defined Contribution Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . .78Exhibit 5.02. Defined Contribution Assets by Subset, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . .79Exhibit 5.03. Top Defined Contribution Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . .80Exhibit 5.04. Top Defined Contribution Recordkeepers, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . .81

PRIVATE DEFINED CONTRIBUTIONExhibit 5.05. Private Defined Contribution Assets by Subset, 1998-2008 . . . . . . . . . . . . . . . . . . .82Exhibit 5.06. Private Defined Contribution Net Flows by Subset, 1998-2008E . . . . . . . . . . . . . . .83Exhibit 5.07. Total Number of Private Defined Contribution Plans by Subset, 1998-2008E . . . . .84Exhibit 5.08. Active Private DC Participants by Subset, 1998-2008E . . . . . . . . . . . . . . . . . . . . . .85


PUBLIC DEFINED CONTRIBUTIONExhibit 5.09. Public Defined Contribution Assets by Subset, 1998-2008 . . . . . . . . . . . . . . . . . . . .86Exhibit 5.10. Top 403(b) Asset Managers, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87Exhibit 5.11. Top 457 Asset Managers, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88Exhibit 5.12. Federal Thrift Savings Plan Asset Allocation, 2001-2008 . . . . . . . . . . . . . . . . . . . . .89

TAFT-HARTLEYExhibit 5.13. Taft-Hartley Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90Exhibit 5.14. Top Taft-Hartley Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91Exhibit 5.15. Taft-Hartley Plans by Type, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92

CHAPTER 6: ENDOWMENTS AND FOUNDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93Exhibit 6.01. Total Endowment and Foundation Assets and Growth, 1998-2008 . . . . . . . . . . . . . .94Exhibit 6.02. Endowment and Foundation Assets by Subset, 1998-2008 . . . . . . . . . . . . . . . . . . . .95Exhibit 6.03. Top Endowment and Foundation Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . .96

ENDOWMENTSExhibit 6.04. Total Endowment Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . .97Exhibit 6.05. Top College and University Endowments, 2007-2008 . . . . . . . . . . . . . . . . . . . . . . . .98Exhibit 6.05. Top College and University Endowments, 2007-2008 . . . . . . . . . . . . . . . . . . . . . . . .99Exhibit 6.06. Endowment Asset Allocation, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100

FOUNDATIONSExhibit 6.07. Total Foundation Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . .101Exhibit 6.08. Top Foundations, 2007-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102Exhibit 6.09. Number of Foundations by Type 2005-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103Exhibit 6.10. Foundation Assets and Flows, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104

CHAPTER 7: SUBADVISORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105Exhibit 7.01. Total Subadvised Assets by Investment Vehicle, 2003-2008 . . . . . . . . . . . . . . . . . .106Exhibit 7.02. Unaffiliated Subadvised Assets by Investment Vehicle, 2003-2008 . . . . . . . . . . . .107

SUBADVISED LONG-TERM MUTUAL FUNDSExhibit 7.03. Subadvised Long-Term Mutual Fund Assets: Unaffiliated Single-Advisor and

Multiple-Advisor Arrangements, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108Exhibit 7.04. Marketshare of Total Long-Term Mutual Fund Assets by Affiliation, 2005-2008 .109Exhibit 7.05. Top Subadvisory Long-Term Mutual Fund Asset Managers: Unaffiliated Single

Advisor, 2005-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .110Exhibit 7.06. Top Subadvisory Long-Term Mutual Fund Sponsors: Unaffiliated Single Advisor,

2005-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111SUBADVISED SEPARATE ACCOUNT CONSULTANT PROGRAMS

Exhibit 7.07. Subadvisory Separate Account Consultant Program Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112

Exhibit 7.08. Top Subadvisory Separate Account Consultant Program Sponsors, 2008 . . . . . . . .113


SUBADVISED VARIABLE ANNUITIESExhibit 7.09. Subadvised Variable Annuity Assets: Unaffiliated and Affiliated Arrangements,

2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114Exhibit 7.10. Marketshare of Total Variable Annuity Assets by Affiliation, 2003-2008 . . . . . . . .115Exhibit 7.11. Top Subadvisory Variable Annuity Asset Managers: Unaffiliated Arrangements,

2005-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .116Exhibit 7.12. Top Subadvisory Variable Annuity Sponsors: Unaffiliated Arrangements,

2005-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .117

SECTION III: RETAIL MARKETS

CHAPTER 8: INDIVIDUAL RETIREMENT ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118Exhibit 8.01. Total IRA Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119Exhibit 8.02. IRA Assets by Investment Product, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . .120Exhibit 8.03. IRA Assets: Traditional and Other, 1998-2008E . . . . . . . . . . . . . . . . . . . . . . . . . . .121Exhibit 8.04. Traditional IRA Assets as Percent of Total IRA Assets, 1998-2008E . . . . . . . . . . .122Exhibit 8.05. Other IRA Assets as Percent of Total IRA Assets, 1998-2008E . . . . . . . . . . . . . . .123Exhibit 8.06. Other IRA Assets by Type as Percentage, 1998-2008E . . . . . . . . . . . . . . . . . . . . . .124Exhibit 8.07. Top-5 IRA Providers by AUA, 2006-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125Exhibit 8.08. IRA Rollover Contributions, 1998-2008E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126

CHAPTER 9: TRADITIONAL PRIVATE CLIENT GROUPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .127HIGH-NET-WORTH INVESTORS

Exhibit 9.01. Cerulli Wealth Tiers, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128Exhibit 9.02. High-Net-Worth Client Assets by Investment Vehicle, 2Q 2008 . . . . . . . . . . . . . . .129

HIGH-NET-WORTH PROVIDERSExhibit 9.03. High-Net-Worth Marketshare by Provider Type, 2008 . . . . . . . . . . . . . . . . . . . . . .130Exhibit 9.04. Projected High-Net-Worth Provider AUM by Firm Type, 2005-2013E . . . . . . . . .131Exhibit 9.05. Top U.S. Wealth Managers, 2Q 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132Exhibit 9.05. Top U.S. Wealth Managers, 2Q 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133Exhibit 9.06. Services Offered at High-Net-Worth and Ultra-High-Net-Worth Providers,

2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .134Exhibit 9.06. Services Offered at High-Net-Worth and Ultra-High-Net-Worth Providers,

2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .135Exhibit 9.07. Open Architecture Estimates Across Private Wealth Channels, 2008 . . . . . . . . . . .136

TRADITIONAL PRIVATE CLIENT GROUPSExhibit 9.08. Traditional Private Client Group Assets and Growth, 1998-2008 . . . . . . . . . . . . . .137Exhibit 9.09. Traditional Private Client Group Non-Investment Management Services, 2008 . . .138

CHAPTER 10: MUTUAL FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139Exhibit 10.01. Total Mutual Fund Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . .140


Exhibit 10.02. Mutual Fund Assets by Subset: Long Term, Short Term, and Closed End, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .141

Exhibit 10.03. Mutual Fund Net Flows by Subset: Long Term, Short Term, and Closed End, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .142

Exhibit 10.04. Number of Mutual Funds by Subset: Long Term, Short Term, and Closed End, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .143

Exhibit 10.05. Total Mutual Fund Assets by Fund Type, 1998-2008 . . . . . . . . . . . . . . . . . . . . . .144Exhibit 10.06. Total Mutual Fund Net Flows by Fund Type, 1998-2008 . . . . . . . . . . . . . . . . . . .145Exhibit 10.07. Top Long-Term Mutual Fund Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . . .146Exhibit 10.08. Top Short-Term Mutual Fund Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . .147Exhibit 10.09. Top Closed-End Mutual Fund Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . .148

FUNDS OF FUNDSExhibit 10.10. Total Funds-of-Funds Assets and Net Flows, 2003-2008 . . . . . . . . . . . . . . . . . . .149Exhibit 10.11. Funds-of-Funds Assets by Subset: Target Risk, Target Date, and Other,

2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .150Exhibit 10.12. Funds-of-Funds Net Flows by Subset: Target-risk, Target-date, and Other,

2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .151MUTUAL FUND DISTRIBUTION

Exhibit 10.13. Long-Term Open-End Mutual Fund Assets by Distribution Channel, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152

Exhibit 10.14. Long-Term Open-End Mutual Fund Net Flows by Distribution Channel, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .153

Exhibit 10.15. Short-Term Mutual Fund Assets by Distribution Channel, 2003-2008 . . . . . . . . .154Exhibit 10.16. Short-Term Mutual Fund Net Flows by Distribution Channel, 2003-2008 . . . . . .155Exhibit 10.17. Closed-End Mutual Fund Assets by Distribution Channel, 2003-2008 . . . . . . . . .156

529 SAVINGS PLANSExhibit 10.18. 529 Savings Plan Accounts and Assets, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . .157

CHAPTER 11: EXCHANGE-TRADED FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158Exhibit 11.01. Total ETF Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .159Exhibit 11.02. Total ETF Assets by Fund Type, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160Exhibit 11.03. ETF Net Flows, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .161Exhibit 11.04. ETF Net Flows by Fund Type, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162Exhibit 11.05. Number of ETFs, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .163Exhibit 11.06. Number of New ETFs, 2000-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164Exhibit 11.07. Top ETF Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .165

CHAPTER 12: COLLECTIVE INVESTMENT FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .166Exhibit 12.01. Total Collective Investment Fund Assets and Growth, 2003-2008 . . . . . . . . . . . .167Exhibit 12.02. Top Collective Investment Fund Managers, 2008 . . . . . . . . . . . . . . . . . . . . . . . . .168


Exhibit 12.03. Collective Investment Fund Assets by Asset Class, 2004-2008 . . . . . . . . . . . . . . .169Exhibit 12.04. Collective Investment Fund Assets by Investment Region, 2008 . . . . . . . . . . . . .170Exhibit 12.05. Collective Investment Fund Management Fees, 2008 . . . . . . . . . . . . . . . . . . . . . .171Exhibit 12.06. Equity Collective Investment Fund Management Fees by Investment Region,

2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .172Exhibit 12.07. Equity Collective Investment Fund Management Fees by Capitalization Strategy,

2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .173Exhibit 12.08. Fixed-Income Collective Investment Fund Management Fees by Investment

Region, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .174Exhibit 12.09. Fixed-Income Collective Investment Fund Management Fees by Duration

Strategy, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .175

CHAPTER 13: MANAGED ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .176TOTAL MANAGED ACCOUNTS

Exhibit 13.01. Total Managed Account Assets, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .177SEPARATE ACCOUNT CONSULTANT PROGRAMS

Exhibit 13.02. Separate Account Consultant Program Assets and Growth, 1998-2008 . . . . . . . .178Exhibit 13.03. Separate Account Consultant Programs: Subadvisory and Open-Architecture

Programs, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .179Exhibit 13.04. Top Separate Account Consultant Program Sponsors, 2008 . . . . . . . . . . . . . . . . .180Exhibit 13.05. Top Separate Account Consultant Program Asset Managers, 2008 . . . . . . . . . . . .181

MUTUAL FUND ADVISORY PROGRAMSExhibit 13.06. Mutual Fund Advisory Program Assets and Growth, 1998-2008 . . . . . . . . . . . . .182Exhibit 13.07. Mutual Fund Advisory Program Assets by Program Type: Packaged, Hybrid,

and Open, 2000-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183Exhibit 13.08. Top Mutual Fund Advisory Program Sponsors, 2008 . . . . . . . . . . . . . . . . . . . . . .184

CHAPTER 14: ANNUITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185Exhibit 14.01. Total Annuity Assets, 1998-2008E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .186Exhibit 14.02. Annuity Industry Sales Mix by Product Type, 1998-2008E . . . . . . . . . . . . . . . . . .187

VARIABLE ANNUITIESExhibit 14.03. Variable Annuity Assets and Growth (Including TIAA-CREF), 1998-2008 . . . . .188Exhibit 14.04. Variable Annuity Assets and Growth (Excluding TIAA-CREF), 1998-2008 . . . .189Exhibit 14.05. Variable Annuity Gross Sales and Net Flows, 2000-2008 . . . . . . . . . . . . . . . . . . .190Exhibit 14.06. Variable Annuity Gross Sales by Distribution Channel, 1998-3Q 2008 . . . . . . . .191Exhibit 14.07. Top Selling Variable Annuity Issuers by New Sales, 2008 . . . . . . . . . . . . . . . . . .192

FIXED AND FIXED-INDEXED ANNUITIESExhibit 14.08. Total Fixed Annuity Assets and Growth, 1998-2008E . . . . . . . . . . . . . . . . . . . . . .193Exhibit 14.09. Fixed Annuity Sales: Traditional and Fixed Indexed, 1999-2008E . . . . . . . . . . . .194Exhibit 14.10. Fixed Annuity Sales by Distribution Channel, 1998-2008 . . . . . . . . . . . . . . . . . . .195


VARIABLE ANNUITY FUND MANAGEMENTExhibit 14.11. Key Variable Annuity Fund Management Metrics, 2000-2008 . . . . . . . . . . . . . . .196Exhibit 14.12. Top Variable Insurance Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . .197

INSURANCE GENERAL ACCOUNTExhibit 14.13. Total Insurance General Account Assets and Growth, 1998-2008 . . . . . . . . . . . . .198Exhibit 14.14. Top Managers of Unaffiliated Insurance General Account Assets, 2007-2008 . . .199Exhibit 14.15. Top Managers of Affiliated Insurance General Account Assets, 2007-2008 . . . . .200

CHAPTER 15: HEDGE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .201Exhibit 15.01. Global Single-Manager Hedge Fund Assets, 1998-2008 . . . . . . . . . . . . . . . . . . . .202Exhibit 15.02. Top-30 Hedge Fund Firms by Hedge Fund AUM, 2008 . . . . . . . . . . . . . . . . . . . .203Exhibit 15.03. Single-Manager Hedge Fund Assets by Domicile, 2003-2008 . . . . . . . . . . . . . . .204Exhibit 15.04. Marketshare of Single-Manager Hedge Fund Assets by Domicile, 2003-2008 . . .205Exhibit 15.05. Change in Single-Manager Hedge Fund Assets by Domicile, 2004-2008 . . . . . . .206Exhibit 15.06. Single-Manager Hedge Fund Assets by Manager Location, 2003-2008 . . . . . . . .207Exhibit 15.07. Single-Manager Hedge Fund Assets by Investment Region, 2003-2008 . . . . . . . .208

FUNDS OF HEDGE FUNDSExhibit 15.08. Global Fund-of-Hedge-Fund Assets, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . .209Exhibit 15.09. Global Fund-of-Hedge-Fund Assets by Segment, 2003-2008 . . . . . . . . . . . . . . . .210

FUND TYPE ANALYSISExhibit 15.10. Global Single-Manager Hedge Funds by Asset Class, 2003-2008 . . . . . . . . . . . . .211Exhibit 15.11. Global Single-Manager Hedge Funds by Directional Bias/Style, 2003-2008 . . . .212Exhibit 15.12. Global Single-Manager Hedge Funds by Sector/Strategy, 2003-2008 . . . . . . . . .213

CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 200912 METHODOLOGY

Cerulli Quantitative Update: The State of U.S. Retail and Institutional Asset Management 2009 is thefifth report in a series of annual CA reports focusing on the aggregate U.S. asset management land-scape. Intended for U.S. asset managers (or those seeking to address the U.S. asset management market-place), this report examines all U.S. market segments, client types, and vehicles in detail within theretail and institutional marketplaces. It pays particular attention to U.S. asset management businessorganizations and the major trends driving change in the ever-changing business of asset gathering;examines the shifting dynamics of investment management distribution; and provides a frameworkthrough which asset management firms can evaluate their ability to support current and expected asset-gathering efforts within existing business structures.

In addition to third-party data sources, this report draws heavily on CA’s annual U.S. asset manager sur-veys: U.S. Retail Asset Manager Survey and U.S. Institutional Asset Manager Survey. Administeredannually, these two surveys are high-level views of asset management business organizations, payingparticular attention to historical and expected sources of growth, profitability expectation, and staffing.

In addition to proprietary survey data, CA analysts compiled information from the following third par-ties, publications, and government entities: Department of Labor, Federal Reserve, EBRI, JudyDiamond, CFO, Investment Company Institute, Federal Thrift Savings Annual Reports, The FoundationCenter, NACUBO, Strategic Insight/SIMFUND, Family Wealth Alliance, Barron’s, NAVA, Morningstar,LIMRA International, Insurance Asset Manager, Alpha Magazine, and HedgeFund.Net.

It’s important to note that Cerulli Quantitative Update: The State of U.S. Retail and Institutional AssetManagement 2009 is an asset-based report (as opposed to flow-based). Therefore, all asset figuresinclude the effects of market appreciation.

In general, CA’s opinions and perspectives are shaped by a robust methodology that includes:

Industry understanding: All Cerulli analysts come to the firm with a background shaped by rele-vant experience at leading financial services firms, which contributes to the internal pool of indus-try knowledge fed by more than 10 years of proprietary research and consulting.

Quantitative analysis: CA maintains an online, password-protected survey engine as part of a vol-untary, information-sharing relationship whereby participants complete confidential surveys inexchange for an aggregate summary of key findings. All information is presented in aggregateform, and proprietary survey information in not directly attributed to participants.

Qualitative research: Cerulli analysts conduct background research interviews with industry exec-utives and advisors in a confidential manner, which allows for candid commentary regarding thestate of the U.S. asset management landscape and major trends driving change within distributionbusiness models.

Introduction & Methodology

SAMPLE SECTIONfrom

CERULLI QUANTITATIVE UPDATE: STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009


Institutional ownership of mutual funds totaled $4.3 trillion at year-end 2008, a decline of 12.3% from prior year totals. Their overall share ofmutual fund ownership rose considerably, however, to 47.4%, up from 43.5% in 2007.

Key Implication: Institutional ownership of mutual funds has exhibited an 8.1% CAGR over the past five years, compared to 3.3% CAGR for retail owner-ship. Should these growth rates persist, institutional investors will be bigger holders of mutual funds by 2011. The implications of this shift in the structure ofthe total mutual fund market should be foremost in the mind of asset managers competing in this space, as more sophisticated and fee-sensitive institutionalbuyers will expect more from their mutual fund managers but demand to pay less. That they will have less tolerance for underperformance by active managersthan past retail investors will likely further intensify the competition by managers to capture alpha, thereby making it even more elusive.

$2,885$3,120

$3,431

$4,004$4,258

$4,854

47.4%

41.8% 41.3% 41.5% 41.6%43.5%

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

2003 2004 2005 2006 2007 2008

0%

10%

20%

30%

40%

50%

Institutional-owned mutual funds Institutional ownership as % of total mutual fund assets

EXHIBIT 1.10Institutional Ownership of Mutual Funds, 2003-2008($ billions)Source: Cerulli Associates


U.S.-focused funds accounted for 55.8% of equity CIF assets. This percentage was much higher among fixed-income funds, with U.S.-focused fundaccounting for 87.6% of total assets.

Key Implication: The need for high-quality fixed-income securities restricts many stable value managers to U.S. securities, which explains why U.S.-focusedfunds dominate the CIF market. Non-U.S. fixed-income indices are also more difficult to construct, as many foreign issues lack sufficient liquidity necessaryfor index construction.

55.8%

87.6%

13.6%

30.1%

7.7%8.0%

86.1%

6.4%

1.6%

0.3%

2.8%

0%

20%

40%

60%

80%

100%

Equity Fixed income Balanced

U.S. International Global Emerging markets

EXHIBIT 12.04Collective Investment Fund Assets by Investment Region, 2008($ billions)Sources: eVestment Alliance, Cerulli Associates

the state of u.s. retail and institutional asset management

Documents

institutional asset

asset management organizations

asset turnover

funds market

asset management industry

dynamic business of

mutual funds exhibits

institutional marketplaces