Sub-advised mutual fund assets will grow 29% over the next five years, rising from $1.7 trillion to $2.2 trillion in 2016, Financial Research Corp. predicts. This will result in an 11% compound annual growth rate.

“We believe asset levels overall will grow, but the market has matured, so growth will keep pace with the broader mutual fund market—but not take more share,” said Lynette DeWitt, director of sub-advisory research at FRC. “Our industry projections retain a 14% ratio of sub-advised assets to total mutual fund assets.”

Sub-advised variable annuity assets, however, are another story, DeWitt said. “There is more growth on the way for sub-advised VAs as they take more share of industry. Leading this trend is ongoing investor interest in VAs due to demand and need for protection in the event of sustainable volatile markets. In addition, we anticipate seeing a gradual transition back toward equity in sub-advised VA portfolios by manufacturers.”

-- This article first appeared on Money Management Executive.


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