Wealth Of Controversy

The Supposed Influence of Asset Managers

Board meeting
Do asset managers have a say in the pricing policies of companies? BlackRock's Germany head insists that's not the case.
  • Why it matters

    Why it matters

    Critics argue that large funds holding significant shares in a company makes that company more laissez-faire when it comes to things like pricing their products. But the author argues asset managers don’t really own the shares they hold for clients.

  • Facts

    Facts

    • A number of studies coming out of the United States over the past year have suggested that prices can rise when shares in an industry are commonly owned by the same group of investors – like asset managers.
    • One such study last year blamed higher airline fares on the role of asset managers, including BlackRock’s significant shareholdings in four major U.S. airlines.
    • BlackRock’s asset management division head in Germany argues asset managers have no say in a company’s pricing policies.
  • Audio

    Audio

  • Pdf

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.

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