A growing debate is underway in Germany over the supposed market power and influence of large asset managers. Where a web of cross-shareholdings once controlled large German corporations in what was referred to as “Germany, Inc.,” some critics now say that faceless Anglo-Saxon funds are gaining control over many companies listed on Germany’s benchmark DAX index.
Several academic studies from the United States have now posed the theory that the concentration of ownership among large asset managers in companies from a specific industry (known as “common ownership”) leads to less competition and promotes social imbalances in society.
Unfortunately, much of the current debate and broader discourse over the power and size of asset managers is subjective and ignores a key aspect: Asset managers such as BlackRock do not own the shares in many companies. They are trustees and do not invest with their own assets, but exclusively with the assets their customers entrust to them.