Among institutional money managers, a two-company battle has emerged for the most assets under management even as more firms have joined the $1 trillion-plus AUM club.
BlackRock Inc. and Vanguard Group Inc. retained the top two positions for worldwide institutional ass- ets under management in 2017, according to Pensions & Investments' annual money manager survey. BlackRock, in first place at $3.88 trillion as of Dec. 31, was up 18% from the end of 2016. Vanguard, at No. 2, was at $3.1 trillion — although its AUM rose 29.6%. Both firms have held those positions since the end of 2014.
Third-place State Street Global Advisors, at $2.103 trillion, had a 9.5% increase.
Since 2014, as the asset gap between BlackRock and Vanguard has shrunk — to $781.8 billion at the end of 2017 from $1.23 trillion — Vanguard has been widening its lead over third-place SSGA, to $998 billion as of Dec. 31 from $2.5 billion.
For the first time in the history of the P&I survey, all of the top 10 firms reported assets above $1 trillion, compared with six a year earlier. Joining that elite group in 2017 with Amundi were J.P. Morgan Asset Management, Wellington Management and Prudential Financial.
Overall, worldwide assets under management for the 565 money managers who completed the survey totaled $67.57 trillion as of Dec. 31, a 15.3% increase from 12 months earlier. Of those assets, 90% were managed by the top 100 firms based on AUM.
"The investment management business is a scale business," said Gregory Davis, chief investment officer of Vanguard, Malvern, Pa. "Larger managers have the ability to drive down costs and invest in technology to become more efficient."
The concentration of assets among the top managers, he said, "is because of economies of scale. … In asset management, it's a zero-sum game. If you take cost into account, there are more that lose than win."
Worldwide institutional assets were a combined $45.25 trillion, up 14.2%.