Baring a December surge by Fidelity Investments, Vanguard is likely to end 2002 as the largest mutual fund firm in the nation. Through November Vanguard equity and fixed income funds held $483 billion in assets compared to $481 billion at Fidelity, according to Bisys' Financial Research Corporation. Interestingly, it was not fund flows but asset value changes that pushed Fidelity into second place.

Fidelity added $8.8 billion in new assets but saw its total assets decline by $58.8 billion. That drop was the greatest of any in the industry (see chart at end of article). Fidelity was not alone in taking big hits to its asset base this year. Joining it were Putnam, which took a $39 billion fall, Janus ($35 billion) and AIM Distributors ($23 billion).

Despite the large flows only one new firm appears likely to crack the top ten fund manager list. OppenheimerFunds is on course to jump to ninth place from eleventh. It will likely replace AIM Distributors which is now fourteenth place.

Indeed, of the entire list of the top 25 fund managers, 22 watched their asset base shrink in 2002. The only complexes to grow their assets were Pimco Funds ($26 billion), American Funds ($6 billion) and Evergreen Funds ($1.2 billion). Both American Funds and Evergreen Funds were only able to grow their asset bases by adding net flows to an otherwise shrinking asset base.

2002 Sales

Overall, net flows to the industry through November total $122.9 billion. That is virtually unchanged from the $123.1 billion in flows through November of last year. The similar looking numbers mask a shift in the makeup of flows though. Nearly all of the net flows went to lower-fee fixed income funds in 2002. Flows to domestic equity funds fell ninety percent to just $6.7 billion from $67.4 billion in 2001, according to the FRC numbers.

That shift in the type of assets means that the industry has likely lost revenues even faster than it has hemorrhaged assets this year. Total assets are on track to fall 8 percent and stood at $3,728 billion at the end of November, down from 4,051 billion last year.

Even a cursory look at the numbers reveals Pimco Funds as the story of the year. The Newport Beach, California-based firm leaped to sixth place from ninth on the charts. It also was the only major player to experience both asset appreciation and net inflows. In addition, its Total Return fund became the largest in the industry. Pimco is on course to end the year with three of its funds among the 15 best selling -- Total Return (1), Low Duration (12) and Real Return (13). All three funds are fixed income offerings.

Half of the twenty best selling fund complexes in 2002 did not rank on the list last year. Leading the list of those firms breaking into the list is Wachovia's Evergreen Funds. The bank fund family was the sixth best selling with $5.2 billion in net flows.

Other new entrants and their net flows are Nations Funds ($4.3 billion), One Group ($4.1 billion), Franklin Distributors ($4.1 billion), T. Rowe Price ($3.2 billion), Federated ($2.8 billion), Royce Funds ($2.8 billion), Calamos Asset Management ($2.7 billion), Pacific Financial Research ($2.5 billion), and Principal Financial ($2.3 billion).

Dropping off of the list of best sellers in 2002 were the following funds (with 2001 rank through November): MFS (5), Hartford (8), Davis Selected (11), Strong (12), Schwab (14), SEI (15), Smith Barney (16), Alliance (17), Van Kampan (18) and Weitz (19).

2002 Fund Complex Rankings     (equity and fixed income assets only, data estimated through 11/2002)
Rank	Fund Complex	'02 AUM ($mm)	'01 AUM ($mm)	2001 Rank	2002 Net Flows ($mm)	Rank	2002 Asset Change ($mm)	2002 Asset Change (Percent)
1	Vanguard Group	483,632	494,122	2	35,733	2	-10,490	-2.1%
2	Fidelity (Combined)	481,463	540,341	1	8,825	5	-58,878	-10.9%
3	American Funds	333,218	326,952	3	36,197	1	6,266	1.9%
4	Franklin Distributors Inc	150,993	153,407	5	4,099	13	-2,414	-1.6%
5	Putnam Investments	138,837	178,053	4	-14,426	*	-39,216	-22.0%
6	PIMCO Funds	109,436	82,822	8	25,378	3	26,614	32.1%
7	T. Rowe Price Investment Services	83,523	89,631	7	3,215	15	-6,108	-6.8%
8	Janus	80,012	114,969	6	-13,334	*	-34,957	-30.4%
9	OppenheimerFunds	75,127	78,551	11	4,770	8	-3,424	-4.4%
10	MFS Investment Management	66,820	81,387	9	-1,097	*	-14,567	-17.9%
11	American Century Investments	58,802	71,423	13	-3,451	*	-12,621	-17.7%
12	American Express Financial	58,771	72,615	12	-5,287	*	-13,844	-19.1%
13	Scudder Investments	58,078	71,007	14	-5,493	*	-12,929	-18.2%
14	AIM Distributors Inc	56,874	79,748	10	-7,918	*	-22,874	-28.7%
15	Dreyfus Corp	50,554	55,922	16	370	*	-5,368	-9.6%
16	Merrill Lynch Investment Managers	47,691	56,495	15	-2,377	*	-8,804	-15.6%
17	Smith Barney Asset Management	44,910	50,007	18	1,469	*	-5,097	-10.2%
18	Van Kampen Funds	44,007	48,855	19	2,175	*	-4,848	-9.9%
19	Morgan Stanley Investment Advisors	41,851	54,962	17	-5,436	*	-13,111	-23.9%
20	Evergreen Funds	41,091	39,837	21	5,233	6	1,254	3.1%
21	Alliance Fund Distributors	36,405	48,378	20	-2,967	*	-11,973	-24.7%
22	Federated Investors	36,146	36,277	22	2,820	16	-131	-0.4%
23	One Group	34,260	32,554	25	4,110	12	1,706	5.2%
24	SEI Corp	31,849	34,662	23	749	*	-2,813	-8.1%
25	Liberty Funds	30,264	33,296	24	66	*	-3,032	-9.1%
	Industry Totals	3,727,909	4,051,084		122,941		-323,175	-8.0%
Source: Financial Research Corp.

 

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