Worldwide manager-of-managers assets grew 32% during 2004 according to Cerulli Associates’ fourth annual survey of the manager-of-managers market.

That’s the second consecutive year of where annual growth exceeded 30%.

According to the report, “increasing demand for embedded-advice products, as well as the increasing split between manufacturing and distribution functions in fund management are fueling the growth of assembled investment products.”

Manager-of-managers products received a record US$50 billion of net new inflows during 2004, which was nearly twice the level recorded in 2003.

In addition, global manager-of-managers assets grew faster than fund-of-funds for the third consecutive year.

These results reinforce Cerulli Associates’ belief that manager-of-managers products may slowly replace fund-of-funds in the retail space. Cerulli has projected a long-term compound annual growth rate of 14% for the manager-of-managers segment.

Cerulli considers the term “multimanager” to include assets of both manager-of-managers products and fund-of-funds. Cerulli defines manager-of- managers as “asset management products that use multiple subadvisors, each of which receives its assets in the form of a separate-account mandate.” Fund-of-funds are defined as “public-offer collective schemes, managed funds, or mutual funds that invest in other public-offer collective schemes, managed funds, or mutual funds.”

The report shows Russell Investment Group remains the largest manager-of-managers investment firm in the world. Russell holds a 19.9% share of the rapidly growing US$492 billion global manager-of-managers market.

In Canada, Russell holds 51.1% market share.

The report is based on total assets under management as of Dec. 31, 2004.