You may know the names Vanguard, Blackrock, and State Street. All are global investment managers who have done a lot to champion low-cost access to investing for retail investors. Due to their scale and focus on index tracking funds, they have a stake in the great majority of listed companies, and they own a decent stake in many of those companies. As an example, Vanguard is the largest holder of Apple stock, while Blackrock and State Street are the third and fourth largest holders.
Pre-pandemic, some academics started wringing their hands about this concentration by a few large asset managers in the companies in major indices like the S&P 500 in the US. There were hints that this could be anti-competitive and asset managers might have too much voting power in the companies concerned, but it was presented in boring articles, so it never captured much attention.
Post-pandemic, some peoples’ thinking shifted, as evidenced by lockdown protests. There was suddenly a lot of conspiratorial thinking that shadowy figures were controlling everything in the world. Conspiratorial people like to do internet detective work and go down many rabbit holes. Sometimes they reach conclusions from information without understanding it. One example is that of Blackrock, Vanguard, and State Street. Some people discovered that these asset managers own a lot of listed companies, and they were shocked by it.
Read the full Down the Rabbit Hole post.
This represents general information only. Before making any financial or investment decisions, I suggest you consult a financial adviser to take into account your personal investment objectives, financial situation and individual needs. Anyone looking to build a portfolio should seek financial advice to find out which strategy is right for them, if you are seeking financial advice then you should consider one of the best financial advisors in Australia who may be able to help you identify your goals and put in place a reliable strategy to pursue them.
