Boston’s Financial Industry Sees A Banner Year

Boston’s investment business is back in a familiar place: awash in money.

To the surprise of many, 2013 turned out to be a huge year for the stock market, marking a psychic return to better times for the city’s large community of money managers. Many now have record assets under management after stocks surged nearly 30 percent last year and created hundreds of billions of dollars in new wealth.

“It snuck up on them,’’ said Alex Thomson, a longtime executive recruiter in Boston’s investment arena. “All of the political discussions put a damper on most people’s expectations.’’

Even as the year progressed, the market’s upward streak came with little celebration. The year was so dominated by worries over the shutdown of the US government and a stubborn economy that there was none of the exuberance that often accompanies a big year in the market.

“There was very little euphoria,’’ said Bruce Herring, group chief investment officer in Fidelity Investments’ global asset allocation group. “Most of us were pleasantly surprised by the magnitude’’ of the gains.

Meanwhile, Americans’ retirement nest eggs quietly recovered, and the investment accounts of schools, charities, and pension funds fattened.

The Massachusetts state pension fund, for instance, added nearly $7 billion to its coffers, or 13 percent, just through November. MFS Investment Management grew its assets by a staggering one-quarter, or $90 billion. Fidelity Investments grew by $200 billion, or 12 percent.

These money managers didn’t grow in lockstep with the stock market because they also invest in other types of instruments. And bonds, for example, had a difficult year. Even so, Loomis, Sayles & Co., a Boston firm that primarily manages bond funds, saw its assets rise 8 percent, to $200 billion.

“It was a good year,’’ said Mark Donovan, cochief executive of Boston Partners, in stark understatement. His firm, a unit of the Dutch financial giant Robeco Group, nearly doubled in size last year, from $27 billion to $51 billion.

His cochief, Joseph Feeney, recalled the firm’s low, back in March 2009, when assets slumped to $7 billion — “a near-death experience,’’ he said. But the gains of the past several years have washed that away. Over the next five to seven years, he said, “I don’t think it’s outlandish, given momentum and performance, that we could close to double assets, to $100 billion.’’

A bit of swagger is a marked change from the years after the financial crisis of 2008, which not only dealt investors and money managers stunning losses, but also threw a blanket of caution over the industry.

Indeed, despite one of the greatest bull markets of all time since 2008, hiring in this region’s finance businesses is still sluggish. According to the Federal Reserve Bank of Boston and the Bureau of Labor Statistics, the number of jobs in the securities and investment field in Massachusetts grew just 1.9 percent last year, through November.

“Massachusetts has yet to post year-over-year job gains in finance and insurance in 2013 — and in fact has not seen year-over-year growth in the sector since August 2007,’’ said Robert Clifford, a policy analyst at the Boston Fed.

A case in point is Robeco Boston Partners. It has 125 employees today, almost exactly the same number as when the market crashed in November 2008. Other firms have cut jobs. Fidelity last fall cut several portfolio managers in its institutional arm, as part of a restructuring.

Fidelity said its investment business is strong and growing globally, but that its managers “regularly review resources to ensure they are aligned.’’

Even so the financial sector remains one of Boston’s largest employers. And hiring may at last be starting to show signs of ticking up, according to Thomson, the recruiter. Firms stayed cautious during the long, slow economic recovery, he said, and that caution is likely to show up in bonus checks as well.

While investment managers are paid on the growing piles of assets of they manage, top executives haven’t forgotten the excesses of 2007, Thomson said. “They want to make sure [2013] is not an anomaly of a year.’’

Beth Healy can be reached at Beth.Healy@globe.com.