What jumped out at me was the massive size of the US fund management industry – just 3 large players are gargantuan:
Fidelity employs 40,000 people in the U.S., managed $1.7 trillion in assets directly as of June 30 and administered a total of $4 trillion worldwide. In addition to its financial services income, the FMR holding company took in an estimated $4.52 billion in revenue last year from private-equity investments, including real estate and a building materials company.
The firm has struggled to grow money-management assets. Vanguard, which surpassed Fidelity as the biggest U.S. mutual-fund company in 2010 and offers mostly index funds and ETFs, has been a beneficiary of the shift into passive funds. Its assets surged 73 percent to $2.6 trillion during the six and a half years from the end of 2007 to June 30, 2013. BlackRock, the world’s biggest money manager, more than doubled assets to $3.9 trillion in the period.Pimco, whose funds are overseen by Co-Chief Investment Officer Bill Gross, has seen its assets more than double to $2 trillion.
The piece was particularly interesting following NZ First Leader Winston Peters’ comments about setting up a “KiwiFund” as a condition of any confidence and supply agreement after next year’s election. He might want to read John Cochrane on the size of the finance industry and how it’s misunderstood.