SOURCE: Institutional Investor

Institutional Investor

July 26, 2012 13:28 ET

Big Money Managers Must Work Harder for Their Money

BlackRock Is No. 1 in the II300, Institutional Investor's Annual Ranking of the 300 Largest U.S. Money Managers, With $3.5 Trillion in Assets as of Year-End 2011

NEW YORK, NY--(Marketwire - Jul 26, 2012) - Though financial markets have made up much ground lost in 2008 and early '09, the ride has been bumpy. Investors as a result have changed the way they invest -- and their demands on managers, according to the II300, Institutional Investor's annual ranking of the 300 largest U.S. money managers.

The full ranking and its methodology can be found at www.institutionalinvestor.com.

At the same time, money managers say pension funds' expected rates of return, often as high as 7.5 percent, are unrealistic. And the funds are intended to support beneficiaries who may live 30 or more years in retirement, longevity never seen before.

"You could rely on equity markets giving you somewhere around 7 percent most years," says Robert Fairbairn, senior managing director and head of the Global Client Group at BlackRock, which is No. 1 in the rankings, with $3.5 trillion in assets as of year-end 2011. No longer. "All that adds up to a requirement that assets have to work harder," he says.

No wonder investors are moving to lower-cost, passive strategies when active managers aren't consistently outperforming benchmarks. They also want managers to provide advice and investment solutions across multiple asset classes. "There is demand for consistent alpha generators like hedge funds and for high-quality active management," Fairbairn notes. "There will be a real winnowing out of mediocre players."

Blackrock was followed in the rankings by State Street Global Advisors, with $1.9 trillion in assets; Vanguard Group, with $1.5 trillion, and Fidelity Investments, with $1.4 trillion. The complete rankings and accompanying article are available at institutionalinvestor.com.

The full ranking and its methodology can be found at www.institutionalinvestor.com.

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Now in its fifth decade, Institutional Investor has consistently distinguished itself among the world's foremost financial publications with groundbreaking journalism and incisive writing. In addition, Institutional Investor offers a host of proprietary research and rankings that serve as respected industry benchmarks. For more information visit www.institutionalinvestor.com.

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