MLC and co’s multimanager dominance challenged

By Michael Bailey

The world’s five largest manage-the-manager investment houses, including National Australia Bank’s MLC, have seen their market share shrink rapidly in the past four years as new entrants exploit booming demand for the multi-manager sector.

Global assets in multi-manager products, including manage-the-managers with underlying discrete mandates and fund-of-funds with underlying public unit trust mandates, surged 30 per cent during 2004 to US$960 billion.

However, the proportion held by the world’s largest manage-the-managers — Russell Investment Group, Vanguard Group, SEI Investments, National Australia Bank and Northern Trust Global Advisors — fell below 67 per cent after exceeding 80 per cent in 2001, according to consultant Cerulli Associates Global Multimanager Products 2005 report.

Cerulli said the interest in multi-manager products stemmed from a growing global appetite for products with advice embedded within, as well as the widening split between manufacturing and distribution functions in funds management.

Japan’s multi-manager assets rocketed up 144 per cent off a low base during 2004, the United Kingdom market — where MLC is a player — grew 64 per cent, while the United States, Australia and Spain also invested in the vehicles at a rate above the global average.

Most of Europe, however, lagged behind due to muted interest in equity-oriented products.