As the historically burgeoning mutual fund market cools, the sub-advised sector of the industry is beginning to explode, according to a new survey released today.
Sub-advised mutual fund assets grew an average of 27.4% per year between 1995 and 2000, or 8.9% more than internally managed funds, according to the study, conducted by the Financial Research Corp. of Boston. In addition, large fund families outsourced management of some of their internally managed products last year, creating $11.1 billion in new assets for the sub-advised mutual fund sector, the study shows. The increased attention to sub-advised products may be due in part to market volatility during the past 14 months, which has prompted investors to put a premium on specialized management and demand better relative returns, the FRC says. Net sales in sub-advised funds declined less than 1% last year, attracting $32.8 billion in net sales. And, while internally managed assets for long-term funds dropped by 2.9% last year, assets in sub-advised funds grew 9.1%.