"Supersize me!" That familiar marketing refrain might just as well serve as the motto for the money management industry, which emerged from the den of the bear market last year and resumed its march to gigantism.
For the first time in our 30 years of ranking the biggest firms in the industry, the leader tops $1 trillion in assets. In fact, the two biggest firms in this year's II 300 both scaled that height (see page 56). Even more notable, perhaps, are their identities: State Street Global Advisors in first place and Barclays Global Investors in second. Their ascent marks the first time any indexer has taken the top spot -- a tribute to the energy and ingenuity of these companies but also a reflection of a growing di satisfaction with traditional active money management. The pair push longtime leader Fidelity Investments back to third place, with a still-formidable $964 billion, up 28 percent from the previous year. State Street and Barclays each grew by more than 40 percent.
Money management firms as a whole benefited handsomely from the market revival in 2003. Overall assets of the II 300 climbed to $21.7 trillion, up 18 percent from 2002 and a 16 percent rise from 1999, the peak of the bubble. The smallest firm on the list, Philadelphia International Advisors, had $4.3 billion under management.
Neither State Street nor Barclays, of course, thinks of itself solely as an indexer. A third of State Street's clients, for example, use the firm for more than one investment product; enhanced indexing and active quantitative strategies are among the fastest-growing parts of the business. Both State Street and Barclays have been enthusiastically peddling hedge fund products to investors, though Barclays has made greater headway to date.
Alternative investments continued to be a hot asset class across the board. For the II 300 firms, alternative assets totaled $641 billion at the end of 2003, up 23 percent from the year before and nearly quadruple the $171 billion of 1998.
The trick in doing well year after year, of course, is one composer Irving Berlin discovered midway through his career. "The toughest thing about being a success," he said, "is that you've got to keep being a success."
