'Cap Research' stays ahead of money managers pack.

Leader increases assets under its management by 36%

By far the largest money manager in Los Angeles County remains Capital Research & Management Co., the downtown Los Angeles-based giant, according to this week's List.

"Cap Research," as it is called in money-management circles, had $74.5 billion under management as of Jan. 1, up a hefty 35.9 percent from the year-earlier level.

How does Capital Research, a long-established money manager, achieve such sudden growth?

"The asset level reflects growth in our mutual funds," said Scott McIntyre, associate director for corporate communications at Capital Research. "With interest rates down, investors have been switching out of CDs (certificates of deposits, at banks or thrifts) to mutual funds, and we have benefited from that."

With interest rates staying low, "we aren't seeing any signs of a slowdown" in mutual fund growth, said McIntyre, speaking of 1993.

The growth of Capital Research is not a one-year event, however. Back in first-quarter 1987, Capital Research had only $18.5 billion under management, while back in 1982, it had only $4.8 billion under management. In other words, in about 10 years, Capital Research has increased its assets under management by 15-fold.

It's perhaps befitting that the big manager is having such a fine year -- 1993 marks the company's 60th anniversary. At current growth rates, Capital Research could pass the $100 billion under management level by next year.

An interesting observation: While Capital Research is growing fast, the largest bank based in Los Angeles County, First Interstate, has only $50 billion in assets, about $5 billion less than it had five years ago.

In other words, in the 1990s, Capital Research has become the largest husbander of capital in the Los Angeles basin, bar none.

And with the problems banks are experiencing on California portfolios, and the prospects for continued low inflation -- or even, given recent wholesale price stats, deflation -- it appears clear that Capital Research will oversee Los Angeles' largest pot of money for the foreseeable future.

The No. 2 money manager in Los Angeles is the TCW Group, also based in downtown Los Angeles. The TCW stands for Trust Company of the West, and it had $34.7 billion under management at the start of the year, up 28.5 percent from a year earlier.

Like Capital Research, TCW is a fast-grower; the No. 2 manager had only $3.5 billion under management 10 years ago, and so has grown about 10-fold.

Downtown denizens know TCW for its building at 865 S. Figueroa St., a 35-story reddish tower emblazoned with the initials "TCW" on the top. (Capital Research, in contrast, labors in obscurity in the Security Pacific tower downtown, on Hope Street.)

TCW was the No. 3 manager last year, but this year it moved ahead of Capital Guardian Trust Co., the sister company of Capital Research.

As stated, No. 3 manager on The List this year is Capital Guardian, which has grown only modestly to $28.8 billion from $27.1 billion last year.

What's the difference between Capital Guardian and the fast-growing, larger Capital Research?

The smaller Capital Guardian is an institutional money manager, handling only accounts of $20 million or more. Therefore, the flood of small-investor money into mutual funds hasn't benefited Capital Guardian as it has the bigger Capital Research.

Many of the money managers have posted good growth in recent years. For example, the downtown-based Payden & Rygel, No. 6 on The List, has $12.5 billion under management at latest read, up from $6.1 billion five years ago.

One manager not growing much in recent years is Century City-based CMB Investment Counselors, which had $3.6 billion under management at the start of this year, which was little changed from the $3.4 billion it managed in 1987.

A new company to the money manager List is Pasadena-based First Quadrant Corp., which has a $50-million minimum on new accounts. First Quadrant is No. 7 on The List with $12.4 billion under management.