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Cogent Reports: Large Institutions Set Their Sights on Vanguard

Institutional investors managing at least $250 million in assets are more likely to consider Vanguard for future mandates than any other asset manager. In fact, Vanguard not only earns the top consideration score among both pensions and non-profits managing $250 million or more, but the firm also achieves the highest client satisfaction rating out of 51 asset managers. These and other findings are included in the annual US Institutional Investor Brandscape®, a Cogent Reports™ study by Market Strategies International.

“Many asset managers focus on the upper end of the institutional market, where a relatively small number of institutions control the lion’s share of the assets,” explains Linda York, senior vice president and lead author of the study. “Impressively, Vanguard tops the leaderboard in this elite segment this year, with the strongest consideration potential among both larger pensions and non-profits.”

This achievement is particularly notable due to the stark differences in consideration factors and asset classes of most interest between larger pensions compared to larger non-profits. Pension investors are laser-focused on de-risking their portfolios and report a strong likelihood to increase their allocation to fixed income and alternative strategies. In contrast, non-profits are striving to achieve higher returns and are more likely to seek diversification opportunities in real assets/commodities, real estate and private equity along with passively-managed US equities.

“When we look at the key drivers of consideration among these two segments, the differences are even more dramatic,” continues York. “Larger pensions are drawn to asset managers they perceive to deliver strong, consistent investment performance, a high degree of integrity and transparency, and optimal fees/fee structure. However, larger non-profits see more value in managers that are known for product innovation, commitment to social responsibility and exceptional relationship management. The fact that Vanguard tops the consideration lists of both segments of the market is evidence of the success the firm has in tailoring its product offering, service model and competitive positioning to meet the unique needs of each client.” Only a handful of other firms appear in the top 10 in both segments this year: State Street Global Advisors, Bridgewater Associates and Dodge & Cox.

 

About US Institutional Investor Brandscape

Cogent Reports conducted an online survey of a representative cross section of 405 investors managing $20 million or more in institutional investable assets from October 1 to December 10, 2015. Survey participants were required to play a direct role in the evaluation and selection of investments or asset managers within their organizations. In determining the sampling frame for this study, Cogent Reports relied upon the Standard & Poor’s Money Market Directories (MMD) database of institutional investors. To ensure the population for this research was representative of the universe of institutional investors, strict quotas were established by Cogent based upon a nested classification of institutional investor category and size of assets. Minimal weighting was applied to adjust for purposeful deviations from the actual marketplace distribution. The data have a margin of error of ±4.87% at the 95% confidence level. Market Strategies will supply the exact wording of any survey questions upon request.

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