According to a recent Harvard Governance Blog from its Vice Chair, BlackRock would like you to know that it & the rest of the Big 3 are really small players in the grand scheme of things:
“As index funds are currently growing more quickly than actively managed funds, some critics have expressed concern about increasing concentration of public company ownership in the hands of index fund managers. While it is true that assets under management (or “AUM”) in index portfolios have grown, index funds and ETFs represent less than 10% of global equity assets. Further, equity investors, and hence public company shareholders, are dispersed across a diverse range of asset owners and asset managers.
As of year-end 2017, Vanguard, BlackRock, and State Street manage $3.5 trillion, $3.3 trillion, and $1.8 trillion in global equity assets, respectively. These investors represent a minority position in the $83 trillion global equity market. As shown in Exhibit 1, the combined AUM of these three managers represents just over 10% of global equity assets.”
Umm, gee – isn’t 10% of all the equity assets in the world kind of a lot? I don’t know why we’re supposed to take a lot of comfort from that number – particularly since the Big 3 reportedly control 25% of the stock in the S&P 500 and are on course to increase that stake to more than 40% over the next two decades. These numbers aren’t small.
The blog also says that those AUM numbers are misleading, because they represent “a variety of investment strategies, each with different investment objectives, constraints, and time horizons. For example, BlackRock has more than 50 equity portfolio management teams managing nearly 2,000 equity portfolios.” That’s great – but when Larry Fink comes out with annual letters telling boards of portfolio companies “how things are gonna be,” those 2,000 equity portfolios look pretty monolithic.
“By the way, if this “50 portfolio managers/2,000 portfolios” pitch sounds familiar to you, it may be because at some point you heard the same pitch from one of the Big 3 when it was lobbying your client to allow it to go over a poison pill threshold. At least that’s where I first heard it.”
-John Jenkins, TheCorporateCounsel.net July 25,2019