Study: Institutional Assets Globally Jump 10% in 2010

Research by TheCityUK, a UK-based financial services trade organization, has discovered that worldwide investment management conventional assets rose 10% in 2010 to a record $79.27 trillion.

(October 6, 2011) — New findings by a UK financial services trade organization show that worldwide investment management conventional assets rose 10% in 2010.

Pension fund assets accounted for the largest portion of investment manager assets worldwide in 2010, growing 6.8% to $29.94 trillion, while mutual funds assets grew 7.9% to $24.7 trillion, the report by TheCityUK showed. The firm revealed that the increase in institutional assets globally was fueled mainly by insurance assets, which jumped up $4.25 trillion, or 20.9%, to $24.63 trillion. Together with alternative funds and private wealth funds, assets in the global fund management industry reached $117 trillion.

With $35.6 trillion — or 45% of the global total — the US remained the largest source of institutional money. Japan added $6.1 trillion of institutional cash, while the UK added $6.5 trillion.

TheCityUK discovered assets under management of fund managers in the UK increased by 17% in 2010 to a record £4.8 trillion, which was 15% above the pre-crisis peak in 2007. “The growth in funds for the second year running resulted from both the recovery in equity markets during the year as well as an inflow of new funds,” the report stated.

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“Following two years of decline, fund management margins edged up in 2010 to 34% from 33% a year earlier, still below the 37% peak in 2007. Revenue of UK fund management activities totaled £16.1 billion in 2010, up around a quarter on the previous year,” Marko Maslakovic, Senior Manager, Economic Research at TheCityUK, said.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

According to the UK’s leading shareholder activist body, it is imperative for News Corp to overhaul its board structure in the wake of its phone hacking scandal.

(October 6, 2011) — Following News Corporations’s phone hacking scandal, local authority pension funds have urged the firm to overhaul its board structure.

The Local Authority Pension Fund Forum (LAPFF), whose 54 members have combined assets of £100 billion, has issued a voting alert to its members this week on News Corp. “Having undertaken extensive research into the phone-hacking scandal, and having engaged with News Corp directly, LAPFF has reached the view that board change is necessary. The Forum believes that lead director Rod Eddington is well placed to take this process further,” according to a news release on the firm’s website.

The statement by LAPFF continued: “The Forum believes that the News Corp board must take responsibility for the hacking scandal and that this would be best achieved by a change to its existing membership and structure. LAPFF believes that James Murdoch’s continued presence on the News Corp board is causing significant reputational damage to the company and is no longer in shareholders’ interest. The Forum has therefore recommended that its members oppose James Murdoch’s election.”

Additionally, LAPFF said it wishes to see a separation of powers at the head of the company, and the appointment of an independent chair. The Forum has recommended that its members oppose the election of Rupert Murdoch, who currently holds the combined roles of chair and chief executive.

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“News Corp and its shareholders desperately want to draw a line under this scandal, but that will only be possible if the board accepts the need to demonstrate real accountability,” stated Forum chairman Ian Greenwood. “That requires a change in the structure and the make-up of the board. Whilst these are difficult issues for the company to address, we believe that to secure News Corp’s long-term future such reform is necessary.”

In September, pension funds and other News Corp shareholders brought fresh charges against the media firm stemming from its phone-hacking scandal. The shareholders — including the New Orleans Employees’ Retirement System and Central Laborers Pension Fund — stated that the “still unfolding hacking scandal is just a continuation of the board’s malfeasance.” Shareholders highlighted cases involving several News Corp US subsidiaries which suggested that hacking, privacy breaches, and anticompetitive practices were not restricted to the newspaper division.

In July, the Massachusetts Laborers’ Pension and Annuity Funds (Mass. Labor) filed a lawsuit against Rupert Murdoch and the other directors of media giant News Corporation, adding to the list of shareholders suing the company for failure to act in the wake of the recent phone hacking scandal.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742