Top 50 Money Managers

Where the flows are: A look at the hottest active managers

Andrew Osterland, special to

The migration of assets from actively managed mutual funds to passively managed ETFs and index funds hasn't abated this year, but not every active asset manager is in the doldrums.

J.P. Morgan hauled in $12 billion in net inflows this year through the end of September, according to data from research firm Morningstar, and more than $21 billion in the last 12 months. Capital Research, manager of the American Funds family, has also been attracting money after years of bleeding assets, gathering more than $10 billion in the year to date — second to J.P. Morgan among the top fund firms.

Erik Isakson | Getty Images

Dodge & Cox, the scrappy San Francisco-based fund-management firm, has taken in almost $25 billion in the last year — tops among all firms — despite closing its popular International Stock Fund to new investors at the beginning of the year.

"Passive investing is gaining more and more assets, but there are a number of active managers that continue to attract investors because of their low fees and consistent performance," said Roland Czerniawski, markets research analyst at Morningstar.

The CNBC editorial team presents our inaugural list of the Top 50 Money Management Firms.

It's been a while coming, but American Funds — the largest active asset manager in the country, with $1.13 trillion in assets at the end of September — appears to have turned a corner. Almost exclusively distributed through financial advisors, the fund family saw massive outflows of assets after the financial crisis but has recently begun to attract money again.

"They were losing assets up until last year despite outperforming [benchmarks] for the last several years," Czerniawski said. "It looks like a turnaround.

Evaluating the value of using active management

"This year has been one of their best recently," he said, in terms of fund flows.

The turnaround comes as other big active managers, such as Fidelity, Franklin Templeton and Columbia Threadneedle, have seen asset levels decline.

Steve Deschenes, head of client analytics at Capital Group, attributes investment results as the reason for the financial advisors' renewed confidence with the firm.

"We've done a lot more in the last two years highlighting our good results," said Deschenes. "We appreciate being on the positive side of fund-flow analyses, but the longer you give us and the more fundamental your analysis, the better we look."

Mutual funds fee fight

J.P. Morgan Asset Management has also been one of the biggest winners among active fund managers so far this year. Its funds are also marketed predominantly to its own, as well as external, financial advisors.

Andrea Lisher, head of U.S. funds for J.P. Morgan, credits the firm's success to an extensive product lineup and to a robust support program for advisors.

"We've differentiated ourselves in the market by building out a program to help advisors deal with confusing markets," Lisher said. "Our ability to help advisors talk with their clients and put the markets in context has helped us stay ahead of the pack."

J.P. Morgan managed $264 billion at the end of September.

Along with the shift to passively managed funds, the biggest trend in the fund industry over the last year has been the outflows of assets from U.S. equity funds (-$150 billion from active and $138.5 billion inflows to passive) and the inflows to international ones ($36.9 billion to active and $167.5 billion to passive). "U.S. equity flows have been suffering, and virtually all the active firms are experiencing it," said Czerniawski at Morningstar.

Will bear market push investors to active management?

The two favorite categories of funds with investors currently are fixed-income and international stock. The two most popular passively managed funds are the Vanguard Total International Stock Index Fund, which has taken in $54.8 billion through the end of September, and the Vanguard International Bond Index Admiral, which attracted $17.7 billion through the end of September. Of the top 20 actively managed funds in terms of asset flows over the last six months, 11 were fixed-income funds and seven were in the international equity category.

The Metropolitan West Total Return Bond Fund topped the list, attracting $16.4 billon. Fidelity and American Funds tied for top equity fund in terms of flow, with Fidelity's Strategic Advisers Emerging Markets Fund and the American Funds EuroPacific Growth Fund both pulling in $3.4 billion each year to date.

The volatile markets are exciting. They give us the opportunity to demonstrate the value of active management.
Andrea Lisher
head of U.S. funds for J.P. Morgan

While investors still have about $2.3 trillion of the $3 trillion invested in taxable bond funds with active managers, they are growing more comfortable with passive funds in the sector. Through the end of September, $110.1 billion in assets flowed into passive funds in the category, while $66.5 billion flowed out of active ones.

The ongoing trauma of PIMCO, one of the largest fixed-income managers in the country, accounts for a good chunk of that. Since the departures of both Mohammed El Erian and Bill Gross, the firm has been losing assets at an alarming rate. In the year to date, it has had outflows of $67.7 billion, and in the last year it has lost a staggering $159.1 billion. Currently, PIMCO mutual funds have $317 billion in assets, and the firm has total assets under management of $1.4 trillion.

Money-management growth = more choices for investor

A promising fund category for active managers since the financial crisis has been in alternative assets. The so-called liquid alternative funds, which invest in a variety of assets and strategies designed to produce returns not correlated with stocks and bonds, have quickly amassed $206 billion in assets at the end of September. At the end of last year, interest from investors appeared to wane as returns had badly lagged both stocks and bonds over the last several years.

Flows, however, have begun to pick up again as volatility in other asset classes has increased. As a group, the alt funds took in $1.6 billion in September, and $16.5 billion in the year to date.

"The alternatives category appears to have momentum," Czerniawski said. "With the turmoil in markets, it wouldn't surprise me if the inflows accelerate from here."

The volatility may arguably play to the advantage of active managers as a whole, as investors become more concerned with avoiding losses rather than capturing market gains.

"We're deep believers in active management," said Lisher at J. P. Morgan. "The volatile markets are exciting."

She added: "They give us the opportunity to demonstrate the value of active management."

Industry observers say it looks like there could be plenty more opportunities.

—By Andrew Osterland, special to

This story has been updated to reflect that PIMCO mutual funds now have $317 billion in assets, and the firm has total assets under management of $1.4 trillion.