asset management industry

Our Lives in Their Portfolios: Why Asset Managers Own the World
by Brett Chistophers
Published 25 Apr 2023

Among the holders of wealth surpluses, there have always been corporations and individuals keen not to handle investment of those surpluses themselves, but rather to outsource such activity to expert, professional managers. Investment managers referred to as trusts were already an institutional fixture in the City of London by the mid nineteenth century, for instance. Nevertheless, it would be another century before anything resembling the modern asset-management industry began to take shape. And it was not until the beginning of the 1980s that that industry began to enjoy significant growth: precise consolidated figures for that period are not readily available, but global AUM – which, as we have seen, breached $100 trillion in 2020 – probably amounted to not much more than $100 billion (one-thousandth of the 2020 sum) four decades previously.

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But the question of who owns the homes we live in and the infrastructures we depend upon to go about our daily lives is another matter entirely. As this book will show, it matters to households very much who owns such assets, in a way that is typically experienced very directly, even viscerally. Simply recall Summer House. Housing and infrastructure belong within what the asset-management industry defines as a wider class of so-called ‘real assets’, which is to say, investible assets that possess physical substance, as opposed to existing (like financial assets) only in digital form, or at most as paper certificates. Asset-manager investment in real assets has been growing apace since the 1990s.

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Before we can get to the question of these respective costs and benefits, however, we need to learn much more about what asset-manager society consists of in practice, and when and where it emerged historically and geographically. 1 Asset-Manager Society: The Basics The Investment Fund At the heart of the asset-management industry, and thus of asset-manager society, is the investment fund. Insofar as asset managers invest money entrusted to them by assorted third-party clients, they require one or more vehicles to enable them to pool together that third-party capital, and then invest it on their clients’ collective behalf.

The Innovation Illusion: How So Little Is Created by So Many Working So Hard
by Fredrik Erixon and Bjorn Weigel
Published 3 Oct 2016

He or she simply cannot be a capitalist. In 2012, after the recovery from the Great Recession, the global asset management industry managed 36.5 percent of assets held by pension funds, insurance companies, sovereign wealth funds, high-net-worth individuals, and the mass affluent. Asset managers are not the only form of intermediaries, but they represent a considerable proportion of the gray ownership in Western economies. And as GDP has expanded in the West, the asset management industry has followed – and, going forward, is likely to grow faster than the rest of the economy, according to PwC.

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This squad of horsepower and conspicuous luxury waiting on double yellow lines for its masters was not a sign of London bouncing back after the Great Recession. Nor was it the site of an annual meeting between Gordon Gekko, Sherman McCoy, Patrick Bateman, and their modern, real-life incarnations in the asset management industry. The owners were “wealthy individuals from the Middle East” who had airlifted their four-wheeled toys to London for a short stopover. It costs roughly $30,000 for a car’s return ticket with Qatar Airways, but considering that a customized paint job alone can exceed $40,000, probably no one complained.14 Stories like these get associated with capitalism.

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EFAMA, an industry body, claims that the European assets managed by the industry increased by 11 percent in 2012 and 9 percent in 2013.18 Intermediaries have seized capitalism and their expansion has continuously led investors and governments to demand greater control of the system. While understandable – and, indeed, needed, if you consider the bad apples in the business – these control systems have broadly exacerbated the anticapitalist nature of the asset management industry. Many of these controls have in effect enabled asset managers to contract away the responsibilities that come with owning significant stakes in any company. But it is unclear to whom they have been contracted. Regulators are part of that unknown gray quantity, for sure. And so are rating agencies, industry bodies governing self-regulation, and – of course – the savers that are presented with page after page of legal-financial lingo when they begin to save in a fund.

Trillions: How a Band of Wall Street Renegades Invented the Index Fund and Changed Finance Forever
by Robin Wigglesworth
Published 11 Oct 2021

He was approachable in an industry where public relations often meant a bland statement or guarded conversations with journalists, and no one else could spin a tale like he could. Over the years countless journalists got to know Bogle’s booming baritone—even colleagues would occasionally jokingly call it “the voice of God”—through long interviews and phone calls. He gradually became known as Saint Jack, the titanic, self-ordained moral voice of the asset management industry. Initially it was a moniker used by critics riled by his moralizing tone, but his growing number of fans co-opted it as the best way to describe Vanguard’s founder. As a result, Vanguard naturally started getting glowing press for its low costs and transparency. “Bogle’s relationship with the press, being the first to be called on a lot of subjects, is a tremendous asset,” Jack Brennan, Bogle’s protégé and eventual successor as CEO, later said.3 “It’s worth millions of marketing dollars every year to us.”

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Its success helped Dimensional’s assets under management grow to $34 billion by the end of the 1990s. Today, money from financial advisors accounts for about two-thirds of Dimensional’s over $600 billion of assets under management. In a testament to the strength of its indoctrination of clients, DFA even enjoyed investor inflows in 2008, the asset management industry’s annus horribilis, despite the poor performance of many of its funds in the financial crisis. * * * ♦ THE IMPORTANCE OF DFA’S “propaganda sessions” went far beyond growing the company’s assets under management. By the 1980s, most investment officers at pension funds, endowments, and bank trust departments were at least aware of the academic theories and data on the underperformance of active managers that underpin index investing—even if they didn’t always like or fully accept the implications.

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BlackRock’s bespectacled chief seemed understanding, and as they picked at the sashimi and tempura, Fink revealed that he might have something new in the works. “I’ve got an assignment for you,” he said. “We’re about to buy this company called BGI . . . Why don’t you run the integration?” Wiedman was aware of the company but knew little about it, having never actually worked in the asset management industry himself. “Sounds great!” he nonetheless replied, desperate for a new job, whatever it might be. But for Fink, the reasoning was simple. Ralph Schlosstein, whose diplomatic touch had ensured the successful integration of State Street Research and Merrill Lynch Investment Management, was no longer at BlackRock.

Capital Ideas Evolving
by Peter L. Bernstein
Published 3 May 2007

A paper he coauthored in 2005 with Zvi Bodie of Boston University sums up many of his ideas and proposals for bringing together the neoclassical, the institutional, and the behavioral perspectives on finance. Merton and Bodie call their goal of synthesizing these three perspectives Functional and Structural Finance. In their view, “This analysis has direct implications for the process of investment management and for prospective evolution of the asset management industry.”4  But first, an important question: Why do we have the institutions we have, and why do we organize as we have organized? Merton’s cen- bern_c04.qxd 3/23/07 9:02 AM Page 51 Robert C. Merton 51 tral argument, derived from sociological analysis, is that institutions are endogenous—developed within the system in response to needs, to anomalies, and to dysfunctional aberrations.

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They haven’t lowered their fees, just the risks. We stay at 8 percent to 10 percent volatility by using leverage.” In expressing this impatience with what other investors do, Litterman is drawing on an important article he wrote in early 2004, “The Active Risk Puzzle: Implications for the Asset Management Industry.”8 He opens this article by setting forth what he means by the active risk puzzle. We know that active risk is uncorrelated with market risk—the market goes up or down whether or not your portfolio is doing better or worse. Trying to beat the market, in other words, adds very little to the portfolio’s overall risk.

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“Beyond Equilibrium: The Black-Litterman Approach,” in Bob Litterman and the Quantitative Resources Group of Goldman Sachs Asset Management, Modern Investment Management: An Equilibrium Approach, Hoboken, NJ: John Wiley & Sons, pp. 76–88. Litterman, Bob, 2004. “The Active Risk Puzzle: Implications for the Asset Management Industry,” The Journal of Portfolio Management, September, pp. 88–93. Lo, Andrew, 2004. “The Adaptive Market Hypothesis,” The Journal of Portfolio Management, 30th Anniversary Issue (September), pp. 15–29. Lo, Andrew, 2005. “Risk Management for Hedge Funds: Introduction and Overview,” Financial Analysts Journal, November/December, pp. 16–33.

Makers and Takers: The Rise of Finance and the Fall of American Business
by Rana Foroohar
Published 16 May 2016

This dysfunctional stopgap is usually facilitated by politicians, who don’t want to tell their constituents that they can’t live like they used to (in part because the politicians themselves haven’t had the courage to push through truly growth-enhancing economic platforms). But the retirement crisis isn’t just about these meta-trends. It’s about the fact that finance itself, and in particular the asset management industry that runs our retirement savings, is taking a disproportionate amount of our nest eggs in fees, while offering less return than what we would get by simply throwing our money in an index fund that tracks the market itself. It’s about the failed experiment of the 401(k), an accidental system that has worked well for the top tier of society but not for the majority of Americans.

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15 Another fund management firm papered Wall Street with posters showing an angry Uncle Sam putting a rubber stamp across index funds. “Index funds are un-American!” the ad screamed. “Help stamp out index funds.” Even the prudent Bostonians got into the game. My husband’s father, Robert Minturn Sedgwick, happened to be one of those stewards who worked in the Boston asset management industry before and after World War II. During his time as an associate with Scudder, Stevens & Clark, he came to believe (like Bogle and a growing number of others of that generation) that the whole actively managed fund business was basically a scam. The average investor was far better off putting his or her money into what Sedgwick called the “20 largest,” a group of big-cap US stocks that he came up with, which essentially mimicked a modern index fund.

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But the reforms are being challenged by everyone from small-government conservatives, alarmed by a growing public role, to financial services companies, which fear that government-run plans will put money into simple index funds rather than the managed kinds that generate more lucrative fees for the industry. Unfortunately, the asset management industry lobby is just as aggressive, if not more so, than the Too Big to Fail banking lobby. In just one example of their bullying tactics, Ian Ayres, the Yale academic who coauthored the study on poor returns of actively managed plans I mentioned earlier in the chapter, was bombarded with protests from asset management firms after the study came out.

The New Science of Asset Allocation: Risk Management in a Multi-Asset World
by Thomas Schneeweis , Garry B. Crowder and Hossein Kazemi
Published 8 Mar 2010

Without her constant support and encouragement, we fear this effort would have met the fate of the latter. W CHAPTER 1 A Brief History of Asset Allocation or most investors, asset allocation and its meaning seems relatively straightforward, that is, the process of allocating assets. It is the how and the why of asset allocation that has led to an entire asset management industry dedicated to its operation. Given the amount of resources and effort dedicated to understanding asset allocation, it would be reasonable to expect that after almost 5,000 years of human history there would be a suitable solution. The fact that the investment management industry is still groping for an answer is illustrated in the millions of references to “asset allocation” from any Internet search and the fact that there are enough practitioner books and academic articles on “how to allocate assets” to fill any investor’s library.

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For example, Fernandez (2009b) reports that among various web and database sources the minimum and maximum reported betas for Coca-Cola ranged from a high of 0.80 to a low of 0.31. Similar beta ranges existed for a wide range of other well-known firms. PROBLEMS IN ALPHA AND BETA DETERMINATION Perceived wisdom suggests that the growth of the asset management industry is substantially due to the superior returns offered by fund managers. Investors should realize that there is neither consensus on exactly what constitutes “superior” returns, nor is there a methodology to identify and describe such returns on a quantitative basis. To the typical industry participant, “alpha” means the incremental return attributable to a manager relative to a specified benchmark, and as such, attempts to measure that incremental return on an ex post basis by estimating a least squares regression of manager performance against the specified benchmark.

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As indicated previously, economic conditions may impact the expected return process; therefore, each of them may be viewed as a risk factor underlying the expected return process of a particular investment class sensitive to that information. Previous research on conditional performance evaluation has concentrated on the traditional segment of the asset management industry such as equity and fixed income funds. (See Ferson and Khang, 2002, and Ferson, 54 THE NEW SCIENCE OF ASSET ALLOCATION Kisgen, and Henry, 2003). More recent studies have extended this research to alternative strategies such as hedge funds (Kazemi et al., 2008). In addition, this research has examined whether a conditional performance model that uses a dynamically adjusted portfolio as a benchmark reaches significantly different conclusions compared to those reached by an unconditional linear model.

Value of Everything: An Antidote to Chaos The
by Mariana Mazzucato
Published 25 Apr 2018

I look at how and why this extraordinary redefinition took place, and ask if financial intermediation really has undergone a transformation into an inherently productive activity. In Chapter 5 I explore the development of ‘asset manager capitalism': how the financial sector expanded beyond the banks to incorporate an increasingly large number of intermediaries dedicated to managing funds (the asset management industry), and ask whether the role of these intermediaries, and the actual risks they take on, justify the rewards they earn. In doing so, I question the extent to which fund management and private equity have actually contributed to the productive economy. I ask, too, whether financial reform can be tackled today without a serious debate over whether activities in the financial sector are properly classified - are they what should be seen as rents, rather than profits?

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Shadow-banking activities - borrowing, lending and asset-trading by firms that are not banks and escape their more onerous regulation - all have one thing in common: they funnel finance to finance, making money from moving existing money around. Another significant boost to finance has been the rise of the asset management industry and its different components, from widely marketed retail investment funds to hedge funds and private equity. While average incomes have grown, enabling a build-up of savings especially by the better-off, rising longevity and governments' reduced appetite for social insurance and pension provision have put pressure on households around the world to make their savings work harder.

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Their job was not to invest in productive assets like entrepreneurs, but to be the temporary stewards of savings which they invested in liquid and, generally, financial assets (as opposed to, say, property). In the US, assets under management (AUM) grew dramatically from $3.1 billion in 1951 to some $17 trillion in 2015.13 In the UK, the asset management industry accounted for £5.7 trillion by the end of 2015, more than three times the size of GDP in the same year.14 Changes in regulation played an important role in the expansion of asset management. In the US, pension funds had been obliged to avoid speculative and risky investment, precisely as a prudent man would have done.

Two and Twenty: How the Masters of Private Equity Always Win
by Sachin Khajuria
Published 13 Jun 2022

That is how we plan to expand from here, through consistent investment performance and through transparency of our mission like the kind I am talking about today. That is how our stock will soon be eligible for inclusion in the S&P 500 index. With that final sentence, the penny drops. The Founder has thrown down the gauntlet to critics by being frank about the balance of power in the asset management industry. He came out fighting, but without looking like he was fighting. He was not defensive about the Firm’s recent issues, and he knows that the bombshell of doubling assets under management to over a trillion dollars and joining the S&P 500 index is enough for the chatter to shift from the past to the future.

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When we zoom out a little from the day-to-day picture of what private equity does, we can see this versatility edge more clearly and start to question whether we can still call these investment firms “alternative.” It is true that private capital, including private equity, remains smaller than the passive asset management industry, where the fees are much lower (for example, ten basis points per year in ETF vehicles—if that—versus Two and Twenty) and the vehicles generally track major market indices. But it is now a little outdated to label these firms “alternative.” Think of it this way: The largest publicly listed firms are collectively worth over a quarter trillion dollars in market capitalization and together they manage over 2.5 trillion dollars of assets.

The Future Is Asian
by Parag Khanna
Published 5 Feb 2019

Also, Asian ratings agencies have emerged in response to their Western counterparts’ crisis of legitimacy, providing more robust data for investors looking to allocate more capital to Asia. Analysts project China’s asset management industry to grow from today’s $3 trillion to $15 trillion by 2025 based on the assumption that families will invest 10 percent of their household savings in financial assets (versus 4 percent today), while ASEAN’s asset management industry should reach $4 trillion. From banks and breweries to construction companies and real estate, more and more ASEAN companies are launching IPOs. Asian countries have eased their extreme caution about opening their capital accounts to foreign portfolio capital inflows, and Western investors are rushing in.

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Alibaba’s 2014 IPO in New York was the largest in history at $25 billion, and Asian tech IPOs such as Singapore’s SEA Group and China’s Rise Education have become critical to generating the fees Wall Street banks crave. China now has more than fifty “unicorn” companies with billion dollar–plus valuations (slightly less than the United States), while India has about a dozen and ASEAN just under ten, with many more such pre-IPO companies gathering steam. The global asset management industry is only about 5 percent exposed to Asia, something Western institutional investors—from asset managers and pension funds to family offices—are scrambling to correct as they search for high-yield fixed-income investments such as Asian currencies, sovereign debt, and corporate bonds. Tencent, Alibaba, and Baidu already rank among the largest companies in the world by market cap, but their rapid expansion of customer base and services makes them attractive as core elements of a Western retiree’s portfolio to augment the struggling blue-chip companies such as GE and HP.

The Greed Merchants: How the Investment Banks Exploited the System
by Philip Augar
Published 20 Apr 2005

By mixing up the costs of trade execution, stock research and various other services, brokers have been able to hide all sorts of inefficiencies and asset managers have been able to pass on part of their own costs to clients because commission charges are deducted directly from their portfolios. The practice came under pressure first in Britain, in a Treasury-sponsored report written by a former top fund manager, Paul Myners.59 The asset management industry resisted pressure to abandon bundling for they are able to use it to pass on to their clients costs that they would otherwise have to bear themselves.60 Brokers’ charges are deducted from client portfolios and asset managers have managed to sweep up all sorts of services, including the provision of computers and data, into bundled charges.

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Many fund managers appeared not to make the connection between their own lack of interest in the companies in which they owned shares and mismanagement. A report called Restoring Trust: Investment in the Twenty-First Century by the British think-tank Tomorrow’s Company, chaired by Sir Richard Sykes, the former chairman of Glaxo-Smith Kline, made such a connection, but it was not well received by sections of the asset management industry. Lindsay Tomlinson, chairman of the Investment Management Association, said he was ‘disappointed that all the recommendations were directed at fund managers’. He added: ‘We weren’t responsible for Enron, WorldCom and conflicts of interest at investment banks.’63 Maybe not directly; but by not voting against under-performing boards, excessive compensation or dangerous mergers, and by acquiescing in and sometimes investing in off balance sheet special purpose entities, the investors contributed to the misgovernance.

Super Founders: What Data Reveals About Billion-Dollar Startups
by Ali Tamaseb
Published 14 Sep 2021

Small Business Administration, March 2019, www.sba.gov/document/policy-guidance--small-business-act. 4. “Venture Capital in the Blood,” Computer History Museum, accessed July 30, 2020, https://computerhistory.org/events/venture-capital-blood/. 5. “USA Asset Management Industry: Growth, Trends, and Forecasts (2019–2024),” Mordor Intelligence, 2019, www.mordorintelligence.com/industry-reports/usa-asset-management-industry. 6. National Venture Capital Association, 2019 Yearbook, https://nvca.org/wp-content/uploads/2019/08/NVCA-2019-Yearbook.pdf. 7. “The Economic Impact of Venture Capital: Evidence from Public Companies,” Stanford Graduate School of Business, November 1, 2015, www.gsb.stanford.edu/faculty-research/working-papers/economic-impact-venture-capital-evidence-public-companies. 8.

Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism
by Jeff Gramm
Published 23 Feb 2016

Levin then argues that BKF needs to invest in its employee base so it can properly grow the business to create the most long-term value for shareholders: So while we are comprised of experienced professionals, we are also a young public company that is seeking to develop a diversified series of investment strategies that have the capacity to grow. AT THIS STAGE OF OUR DEVELOPMENT, STOCKHOLDERS HAVE THE POWER TO DETERMINE IF WE WILL GROW OR FAIL. After defending BKF’s spending policies, Levin then addresses accusations of self-dealing. The attack on Barton Biggs, a universally recognized expert on the asset management industry, for paying us rent for a limited period of time for space inside our offices we weren’t utilizing and couldn’t sublet was always a joke, which people understand when we discuss it. We are being attacked for paying a relatively low amount of fees to Peter Solomon’s investment banking organization while these same attackers simultaneously criticize us for not pursuing strategic alternative to realize shareholder value.

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Lichtenstein’s management company has received significant management and consulting fees from public companies where he has become Chief Executive Officer; we think that is something stockholders ought to know. If you wonder where this distrust of the opposition slate comes from, please look at the quality of the arguments being used to attack us. The attack on Barton Biggs, a universally recognized expert on the asset management industry, for paying us rent for a limited period of time for space inside our offices we weren’t utilizing and couldn’t sublet was always a joke, which people understand when we discuss it. We are being attacked for paying a relatively low amount of fees to Peter Solomon’s investment banking organization while these same attackers simultaneously criticize us for not pursuing strategic alternative to realize shareholder value.

Rewriting the Rules of the European Economy: An Agenda for Growth and Shared Prosperity
by Joseph E. Stiglitz
Published 28 Jan 2020

These transformations of banking coincided with the explosion of the asset management sector, as citizens who used to rely on once-vibrant public pension systems tried to save money through the private sector. This new age of asset management saw the rapid rise of institutional investors such as pension funds and insurance companies. By 2009, the asset management industry grew to €12.8 trillion in assets, about one-third of the entire EU banking sector. With all that money to invest on behalf of savers, European asset managers—out to prove themselves better than their competitors in the easy, short-term metric of returns without adequate regard to risk—were only too happy to buy all manner of securities issued by banks.

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accelerated depreciation allowances, 194 activation of labor force, 273 active labor market programs, 273 Africa, 315 aggregate demand cycle of, 58 decrease in, 40–41, 44–46 inequality growth and, 46–48 as spillover issue, 58 stimulating, 60–61 structural policies and, 69 Airbnb, 269 alcohol and tobacco taxes, 200–201 Amazon, 15–16, 129, 131–32 antitrust issues, 131, 132, 134, 135, 326–27 Apple, as tax avoider, 195, 197 artificial intelligence (AI), 298 asset management industry, 169–70 asymmetric shocks, 76 austerity alternatives to, 24, 53–55 breaking from, 50 endangering social protection, 246–47 expansionary austerity, 42 health care weakened by, 242 impacting too-low public investment, 101–6 in 2008 crisis aftermath, 35–37 unemployment, as adverse effect of, 49–50 Austerity Doctrine, 17 balanced budget multiplier, 52–53 banking sector.

Boom and Bust: A Global History of Financial Bubbles
by William Quinn and John D. Turner
Published 5 Aug 2020

Recent experience has shown that such trading has the potential to move stock markets a great deal in a very short space of time: on 6 May 2010, the Dow Jones Industrial Average dropped 10 per cent in a matter of minutes, recovering these losses almost immediately. Algorithmic and high-frequency trading played a major role in this ‘flash crash’ and one can see how it has the potential to exacerbate price movements during bubbles. Some economists believe that bubbles will become less likely in the future, because the rise of the asset management industry means that amateurish individuals with many behavioural flaws are being replaced by sophisticated investors.9 But recent history suggests otherwise. The Japanese Bubble was largely driven by institutional investors, and they also played a large role during the Dot-Com Bubble. During the housing bubble, it was chiefly institutions that invested in subprime mortgage-backed securities.

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Securities Exchange Commission, ‘In the matter of Tomahawk Exploration LLC and David Thompson Laurence’, www.sec.gov/litigation/admin/2018/33-10530.pdf, last accessed 25 November 2019; ICOdata.io. 5. www.coinbase.com, last accessed 19 November 2019. 6. https://crypto20.com, last accessed 19 November 2019. 7. Gornall and Strebulaev, ‘Squaring venture capital valuations with reality’. 8. The inspiration for this table comes from Janeway, Doing Capitalism, p. 233. 9. See Jones, ‘Asset bubbles’ for a discussion of how the rise of asset management industry affects the various theories of bubbles. 10. Posen, ‘Why central banks should not burst bubbles’. 11. Bernanke and Gertler, ‘Should central banks respond to movements in asset prices?’; Trichet, ‘Asset price bubbles’. 12. Bernanke, ‘Asset price “bubbles” and monetary policy’. 13. Assenmacher-Wesche and Gerlach, ‘Financial structure’. 14.

The Bond King: How One Man Made a Market, Built an Empire, and Lost It All
by Mary Childs
Published 15 Mar 2022

Gross’s worst news: lower returns probably meant they’d have to charge lower fees, a long-term double-whammy. This settled heavily on Gross’s audience, the exact crowd whose comfortable existence would bear the brunt of that shift. For years they’d been able to enjoy charging clients fat fees—not so fat relative to the rest of the asset management industry, of course, but fat enough to buy another big home for fun, maybe on the water; some exciting cars; fancy educations for their three-plus kids, all generally irrespective of how they actually performed, of what they actually managed to deliver for those clients funding their lifestyles. Now that would end.

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To be labeled “systemically important” was to be ensnared in a horrible tangle of regulations, just as the banks had been, which would mean hiring expensive lawyers and constricting profitable activities. It might mean limits on risk taking; it might derail Pimco’s carefully constructed “structural alpha” machines in their pursuit of scraping profits from the underbelly of financial markets. Pimco sent lobbyists to Washington to meet with the Federal Reserve Board alongside the asset management industry’s trade group. They argued that Pimco and BlackRock didn’t own the assets; they invested them on behalf of clients. They would never need a bailout because asset prices would just go up or down, and that was how capital markets worked. It was fine. Plus, they pointed out, many of their clients were just people, individuals.

How I Invest My Money: Finance Experts Reveal How They Save, Spend, and Invest
by Brian Portnoy and Joshua Brown
Published 17 Nov 2020

We believe success is best when shared and when we have 50 people at one of our homes, or in the winners circle with us, you can’t put a price tag on that “investment”! Ted Seides Ted Seides, CFA is the Founder of Capital Allocators LLC, which he created in 2016 to explore best practices in the asset management industry from the perspective of asset owners, asset managers, and other relevant players. He created and hosts the Capital Allocators podcast and serves as an advisor to allocators and asset managers. Previously, Ted was a founder and served as President and Co-Chief Investment Officer of Protégé Partners, LLC, where he spent 14 years at a leading multi-billion-dollar alternative investment firm that invested in and seeded hedge funds.

Capital Allocators: How the World’s Elite Money Managers Lead and Invest
by Ted Seides
Published 23 Mar 2021

Active managers by and large underperformed the indexes during this period, with 87% of active U.S. equity managers falling short of the returns of the S&P 500.4 This single, often cited statistic simplifies a more nuanced comparison, which could include active strategies across geographies, capitalization, style, and capital structure. But the point is clear. The decade did not shine brightly on the asset management industry. If there was a winner in the mix, it was The Vanguard Group. The king of passive management and one of three firms comprising the lion’s share of index products,5 Vanguard became synonymous with its low-cost investing philosophy. The organization grew from $1 trillion6 to $6.2 trillion in assets under management since the onset of the financial crisis.7 I was at the forefront of the active-passive debate in a public setting.

Shutdown: How COVID Shook the World's Economy
by Adam Tooze
Published 15 Nov 2021

The sense of outrage generated by the failure to address the AIDS crisis in Africa forced change in the political, economic, and organizational sphere, as much as in medical research.10 A coalition of civil society groups, NGOs, megadonors, health charities, UN organizations, and a few rich national governments—including the United States—came together to widen and speed up the pipeline of new drugs. Their motives varied from national interest to global justice, economic development, commercial profit, and the comprehensive eradication of dangerous diseases. Eventually even the asset management industry intervened to demand full disclosure of trial data.11 Not only was the reputation of the pharmaceutical industry at stake—important for its long-term profitability—but a pandemic would clearly pose a global threat to capital accumulation.12 The push was on to make the public-private model of vaccine development work.

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“Financial Stability Report,” Board of Governors of the Federal Reserve System, November 2020. 10. “How Resilient Are the Banks?” Economist, July 2, 2020. 11. “Financial Stability Review,” European Central Bank, May 2020. 12. “Navigating Monetary Policy Challenges and Managing Risks,” International Monetary Fund, April 2015. “Market Fragility and Interconnectedness in the Asset Management Industry,” speech by S. W. Bauguess, acting director and acting chief economist, DERA, U.S. Securities and Exchange Commission, June 20, 2017. 13. S. Avdjiev, P. McGuire, and G. von Peter, “International Dimensions of EME Corporate Debt,” BIS, June 3, 2020. 14. The best accounts of the repo system are D.

Expected Returns: An Investor's Guide to Harvesting Market Rewards
by Antti Ilmanen
Published 4 Apr 2011

Financialization is related to several other trends: rising leverage and asset richening; securitization and its flip side (i.e., disintermediation from banks); deregulation and active financial innovations; expansion of the delegated asset management industry (institutionalization of asset holding and trading); the finance sector’s increasing political influence; widening income inequality within countries; and globalization and integration of capital markets. Some of these trends are now reversing. For example, certain securitized asset classes have not recovered their liquidity since both the 2008 crisis and the “flight to simplicity”. Other trends, such as growth of the asset management industry, will persist. Asset richening The quarter-century of free markets, disinflation, and financialization coincided with a general decline in real yields and increase in the valuations of all asset classes.

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Lhabitant, Francois-Serge (2007), Handbook of Hedge Funds, Chichester, UK: John Wiley & Sons Ltd. Li, Lingfeng (2002), “Macroeconomic factors and the correlation of stock and bond returns,” Yale International Center for Finance working paper. Litterman, Bob (2004), “The active risk puzzle: Implications for the asset management industry,” Goldman Sachs Asset Management Perspectives. Litterman, Bob; and the Quantitative Resources Group of Goldman Sachs Asset Management (2003), Modern Investment Management: An Equilibrium Approach, Hoboken, NJ: John Wiley & Sons, Inc. Liu, Jun; Francis A. Longstaff; and Ravit Mandell (2006), “The market price of risk in interest rate swaps: The roles of default and liquidity risks,” Journal of Business 79(5), 2337–2360.

The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated
by Gautam Baid
Published 1 Jun 2020

My sincere work ethic and helpful attitude toward my coworkers at my previous investment banking jobs encouraged them to share positive feedback about me when my current employer contacted them during the initial background checks conducted after my job interview. In addition, from time to time, my previous investment banking teammates generously helped me by imparting a solid understanding of the insurance and asset management industries in India from which many initial public offerings came during 2017 and 2018. This, in turn, helped me make better decisions about some of my existing holdings, which had a presence in insurance and asset management businesses. How you behave in one place, will help in surprising ways later.

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Serendipity led me to discover Eicher Motors through a random reading of a UBS report in November 2013. Serendipity drove me to watch Udayan Mukherjee on CNBC one morning in 2015, when he was speaking about the business recovery in SKS Microfinance (now known as Bharat Financial). Later, in March 2017, I also came to understand the long-term growth potential of insurance and asset management industries in India thanks to Mukherjee. I randomly viewed a YouTube video in which he was speaking about the long-term secular trend of financialization of savings in the country. In a similar vein, I accidently discovered many multibaggers during the course of my investing journey, discoveries that were fully driven by chance events or random discussions during the course of my daily life.

The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality
by Brink Lindsey
Published 12 Oct 2017

S., 196n33 End of Liberalism, The (Lowi), 183n18 endogenous growth, 24 entertainment industry, 65, 67, 69, 75–77, 81–84, 125, 144 entrepreneurship, 6, 21–22, 26 entry barriers, 185n11 concentration of industry and, 21 copyright/patent law and, 79–80 growth rate and, 25–26 net entry and, 2 occupational licensing and, 95–97 post-New Deal, 29 rent-seeking and, 21–22 startup rates and, 22 “Tobin’s Q” and, 20 environmentalism, 156–57 equity, 4–5, 47, 49–58, 63 ethanol, 34 European Union Court of Justice, 76 Export-Import Bank, 34 extremism, 2–3 Fannie Mae (Federal National Mortgage Association), 39–40, 45, 53 Faricy, Christopher, 207n35 “fast track” consideration, 170 Faust (Goethe), 196n33 Federal Home Loan Bank Board, 39 Federal Home Loan Mortgage Corporation (Freddie Mac), 40–41, 45, 53 Federal Housing Administration, 39, 41 Federal Housing Enterprise and Soundness Act of 1992 (GSE Act), 41 Federalist Paper No. 10 (Madison), 17 Federalist Paper No. 51 (Madison), 9 Federal National Mortgage Association (Fannie Mae), 39–41, 45, 53 Federal Register, 23 Federal Reserve Bank of Dallas, 35 Federal Reserve System, 35, 52, 56 Federal Trade Commission, 165–66 FHA. See Federal Housing Administration financialization, 37–38, 61–63, 142, 146, 159 Financial Regulatory Commission, 166 financial regulation, 35–63 financial sector, 11, 35–63 bubbles and, 45–55, 190n19 debt financing in, 46–63, 190n19 education and, 62 growth of asset management industry and, 38 inequality and, 35, 62–63 information imbalance and, 139 innovation in, 42 policy image and, 142–43 shrinking, 58–63 subsidies and, 32, 55–58 Fisher, Irving, 58 foundations, 157–58, 208n14 Freddie Mac (Federal Home Loan Mortgage Corporation), 40–41, 45, 53 Friedman, Benjamin, 2 FTC (Federal Trade Commission), 165–66 Furman, Jason, 12, 19 Ganong, Peter, 116 GAO (Government Accountability Office), 161–62 Gated City, The (Avent), 119 geographic mobility, 115–23 education and, 122 home ownership and, 110 occupational licensing and, 98–99 George F.

Getting a Job in Hedge Funds: An Inside Look at How Funds Hire
by Adam Zoia and Aaron Finkel
Published 8 Feb 2008

By sitting at the trading desk and observing the fund’s senior currency trader, I learned the basic principles of momentum trading as well as the overall principles of foreign exchange and futures trading. The fund was small enough—five investment professionals and a small operations staff—that I basically learned how the entire operation functioned. My experience at this fund convinced me that I wanted to learn more about, and possibly work in, the asset management industry. When I returned to the United States I began to interview. I had a lot of friends in banking programs, but since I hadn’t done a junior year internship, I didn’t think I could get into one and hadn’t pursued that route while I was at school. Fortunately, a friend from college who had graduated one year ahead of me called and told me that the consulting firm where he was working was interviewing.

Smart Money: How High-Stakes Financial Innovation Is Reshaping Our WorldÑFor the Better
by Andrew Palmer
Published 13 Apr 2015

Banks have belatedly woken up to that fact: in the wake of the crisis, Goldman Sachs has moved away from treating all its institutional clients as big boys who know what is going on to dividing them into groups that need more or less hand-holding. Municipalities, for instance, may not be allowed to buy or sell derivatives unless these instruments are clearly matched by an underlying interest (a loan that needs hedging, say). The asset-management industry provides more food for thought. In The Little Book of Behavioral Investing, James Montier recounts his experience of running a test among a large group of professional investors. The investors were asked to pick a number between 1 and 100. The winner would be the person who picked the number closest to two-thirds of the average number picked.

The Behavioral Investor
by Daniel Crosby
Published 15 Feb 2018

For active stock pickers, that means that the shares you have just spent months researching and believe in so fully have a one in four chance of being a real winner. This dose of cold reality can seem depressing until you realize its potential for avoiding disaster. Imagine a world in which couples, before walking down the aisle, received appropriate pre-marital counselling and thought deeply about their decision to come together. Or an asset management industry market, not by bravado, but by a reverence for the task of managing other peoples’ money and the attendant difficulties therein. It can be painful consider in the here and now that we are average, but it can prevent a lifetime of painful tomorrows. Look for simple solutions I grew up in Huntsville, Alabama, a town affectionately known as the Rocket City because of a proud heritage of contributions to the space industry.

The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds
by Maneet Ahuja , Myron Scholes and Mohamed El-Erian
Published 29 May 2012

“That’s when I created the All Weather portfolio, which now accounts for virtually all of that family trust money.” In 2001, following the equity market crash, Britt Harris, CIO of the Verizon pension fund, would become Bridgewater’s first institutional client to use All Weather. And in 2004, recognizing the need for the asset management industry to adopt the principles of separating alpha and beta, Dalio published a piece entitled “Engineering Targeted Returns and Risks,” which would show investors how to use the concepts he had used for many years in Pure Alpha and All Weather. Dalio called it “Post-Modern Portfolio Theory (PMPT)” because it built on the concepts of portfolio theory, but went a few steps beyond.

What They Do With Your Money: How the Financial System Fails Us, and How to Fix It
by Stephen Davis , Jon Lukomnik and David Pitt-Watson
Published 30 Apr 2016

We have a long way to go, but these pioneering initiatives help show the way. REDUCING THE NUMBER OF AGENTS Some large, sophisticated institutional investors have begun to realize that the lengthy chain of specialists creates multiple fees between them and their investments. As a result, they are rethinking their entire relationship with the asset management industry. As much as possible, they are managing their own money rather than farming it out. That effort has long been under way for stocks and bonds, but now these megainvestors are attempting to manage such complex investment strategies as private equities and hedge funds. The giant Canadian pension plan for Ontario Teachers buys significant direct stakes in companies and infrastructure.

Built on a Lie: The Rise and Fall of Neil Woodford and the Fate of Middle England’s Money
by Owen Walker
Published 4 Mar 2021

Former prime ministers John Major and David Cameron have also taken similar roles. Several other sitting MPs have supplemented their parliamentary income by working in lucrative jobs at fund managers, including Jacob Rees-Mogg and John Redwood. Despite its importance to the British economy, the asset management industry has managed to portray itself less like a utility and more as an elite service where it dictates the terms. Funds are run so that all the investment risk is borne by the end investor. Investment manager fees are charged as a percentage of the size of the fund rather than a fixed sum, meaning the more money that goes in, the bigger the profits for the managers – despite the fact the workload and resources needed do not grow at the same rate.

Beyond Diversification: What Every Investor Needs to Know About Asset Allocation
by Sebastien Page
Published 4 Nov 2020

This idea of robustness has become quite popular with investors, especially after several strategies outperformed the traditional 60% stocks, 40% bonds portfolio during the sell-off of 2008.8 Risk parity products offered by quantitative asset managers have grown to as much as USD 500 billion in AUM, as of 2018.9 In 2016, I reviewed Edward Qian’s book Risk Parity Fundamentals, for the Quantitative Finance Journal.10 Over the last few years, the asset management industry has been divided on the topic of risk parity. Some prominent asset managers seem to religiously believe that it offers better risk-adjusted performance compared with traditional asset allocation approaches, irrespective of where and how it is implemented. Others believe that risk parity is a fad fueled by misleading interpretations of finance theory and dubious backtests.

Red Flags: Why Xi's China Is in Jeopardy
by George Magnus
Published 10 Sep 2018

It also agreed that priorities would henceforth be to make finance serve the real economy, pay close attention to financial stability risks, and promote ‘direct financing’ (meaning a greater role for equity and fixed income markets). Pressing issues for the committee will be to dampen down leverage and arbitrage in the $15 trillion asset management industry, and to try and end the ubiquitous practice of guaranteeing capital and interest payments to investors, which speak to a low level of confidence in the security or value of contracts. Draft rules, which have a mid-2019 target for implementation, would force banks to move many assets back on to their balance sheets, where they would be more transparent and subject to established capital adequacy, liquidity and risk rules.

The Pyramid of Lies: Lex Greensill and the Billion-Dollar Scandal
by Duncan Mavin
Published 20 Jul 2022

Friedman and his team had taken the drastic action to prevent investors withdrawing their money the previous summer to avoid a run on the funds. But now, Friedman and several others were gone. Haywood was gone. Sheard was long gone. GAM was under the stewardship of David Jacob, who had been a non-executive director on the firm’s board since 2017. Jacob was a veteran of the asset management industry, and not without his own baggage. Back in 2001, he had been fired from a senior role at Merrill Lynch when a currency trader who worked for him had allegedly shifted trading profits around to favour some clients over others. Since then, he’d been blemish-free in a handful of senior roles at City asset management companies.

The Key Man: The True Story of How the Global Elite Was Duped by a Capitalist Fairy Tale
by Simon Clark and Will Louch
Published 14 Jul 2021

To conceal the deficit, Arif and his team started to systematically sweep all the available cash from Abraaj’s funds, companies, and bank loans into a secret set of bank accounts that investigators later named the Abraajery. By mixing up investor money from different funds in the Abraajery, Arif was committing a cardinal sin in the asset-management industry. He was also breaking the law. Abraaj was supposed to buy companies on behalf of the investors in its funds, and when Abraaj sold those companies it was supposed to promptly return the profits to the investors. But that’s not what always happened at Abraaj. Abraaj owned a company called Integrated Diagnostics Holdings, or IDH, which operated a chain of medical-testing clinics in Egypt.

Other People's Money: Masters of the Universe or Servants of the People?
by John Kay
Published 2 Sep 2015

But most intermediation in the investment channel takes place through large asset managers; securities markets now play a minimal role in providing funds for new investment in business. It is time to query whether the stock markets that consume so much resource and receive so much attention any longer serve an important economic function. The concentration of the asset management industry means that direct relationships between asset managers and savers, on the one hand, and companies or other users of investment funds, on the other, are not only possible but should provide a higher quality of both search and stewardship. But the emphasis on public markets means that much of the activity of asset managers today involves neither search nor stewardship.

The Black Box Society: The Secret Algorithms That Control Money and Information
by Frank Pasquale
Published 17 Nov 2014

Les Leopold, How to Make a Million Dollars an Hour: Why Hedge Funds Get Away with Siphoning Off America’s Wealth (Hoboken, NJ: John Wiley & Sons, Inc., 2013); Danielle Kucera and Christine Harper, “Traders’ Smaller Bonuses Still Top Pay for Brain Surgeons, 4-Star Generals,” Bloomberg News, January 13, 2011, http://www.bloomberg.com /news/2011-01-13/traders-smaller-bo nuses-still-top-pay-for-brain-surgeons-4-star-generals.html. Justin Fox, “Just How Useless Is the Asset-Management Industry?” Harvard Business Review (blog), May 16, 2013, http:// blogs.hbr.org/fox /2013/05/just-how-useless-is-the -asset-.html. 34. Wallace C. Turbeville, “A New Perspective on the Costs and Benefits of Financial Regulation: Inefficiency of Capital Intermediation in a Deregulated System,” Maryland Law Review 72 (2013): 1179.

Inside the House of Money: Top Hedge Fund Traders on Profiting in a Global Market
by Steven Drobny
Published 31 Mar 2006

Gorton: I would say it is a function of all three, the least of which is the amount of money that is being allocated to hedge funds. Standing: I would argue that the decline of volatility and thus opportunities in financial markets is partly due to the shift of risk assets from the banking sector to the asset management industry. Banks used to take a lot more market risk. Because they guarantee their depositors’ money back at par, they are not well equipped to withstand shocks. Hedge funds and asset managers are now taking on a larger percentage of risk around the world, and because they do not guarantee investors their money back at par, they are better suited to handle that risk.

The Death of Money: The Coming Collapse of the International Monetary System
by James Rickards
Published 7 Apr 2014

Provincial officials and project managers gladly escort interested parties on a new city tour to explain the possibilities. One laboratory is pointed out as the future source of Chinese wireless broadband technology. Another skyscraper is eagerly described as a future incubator for a Chinese alternative asset management industry. An unfinished hotel is also said to be taking reservations for world-class conferences with A-list speakers from around the world. Meanwhile the visitor stares out at miles of mud flats, with poured concrete and steel rebar footings for dozens more malls, skyscrapers, and hotels. This vision of seven new cities would be daunting enough—until one realizes that Nanjing is among dozens of cities all over China building similar metroplexes on a mind-boggling scale.

How I Became a Quant: Insights From 25 of Wall Street's Elite
by Richard R. Lindsey and Barry Schachter
Published 30 Jun 2007

Mark has also received the Distinguished Scholar Award from the Institute of International Education and the Fulbright Foundation, as well as the Bernstein Fabozzi/Jacobs Levy Award for his article published in The Journal of Portfolio Management in 2004. In addition to the Handbook of Alternative Assets, Mark has published three financial textbooks and more than 80 research articles on the topics of separating beta from alpha, institutional fund management, business models for the asset management industry, corporate governance, hedge funds, real estate, currency overlay, credit risk, private equity, risk management, and asset allocation. He serves on editorial and advisory boards for the Journal of Portfolio Management, Journal of Alternative Investments, Journal of Private Equity, Journal of Investment Consulting, and Journal of Derivatives Accounting, and on advisory and executive committees for the New York Stock Exchange, Euronext, MSCI-Barra International Indexes, the International Association of Financial Engineers, The CFA Institute’s Task Force on Corporate Governance, The CFA Institute’s Committee on Global Investment Performance Standards, The Conference Board Commission on Public Trust, The Center for Excellence in Accounting and Security Analysis at Columbia University, The Dow Jones-AIG Commodity Index Board, and the National Association of State Investment Officers.

Mastering Private Equity
by Zeisberger, Claudia,Prahl, Michael,White, Bowen , Michael Prahl and Bowen White
Published 15 Jun 2017

As Centre Director, he leads its research and outreach activities and has published on topics including operational value creation, responsible investment, LP portfolio construction and minority investment in family businesses. Bowen has spent his career working in and conducting research on the global alternative asset management industry. In the New York hedge fund industry, he researched topics from statistical arbitrage investment strategies in commodities markets to macroeconomic trends and global hedge fund performance. Having worked for both a proprietary trading firm and a fund of funds, he has seen first-hand the challenges faced by investors and allocators of capital to the hedge fund industry.

Investment: A History
by Norton Reamer and Jesse Downing
Published 19 Feb 2016

In the wake of World War II and in an economy that had recently experienced a large upward shock in labor supply when millions of veterans returned from the war, ARD focused on both providing capital and enhancing the managerial skills of businesses.36 The corporation primarily sought institutional capital rather than capital from retail investors and as such was relatively unique in the asset management industry for at least a decade. It was successful in investing in a wide array of companies before ultimately merging with Textron in 1972. However, it was in the 1970s, when the first major shift in government regulations and investor perceptions of private equity funds occurred, that the industry really took off.

Them And Us: Politics, Greed And Inequality - Why We Need A Fair Society
by Will Hutton
Published 30 Sep 2010

Just as the trade unions’ capture of the state ended in the breakdown of social democracy and the evident bankruptcy of the institutions and policies it generated – from incomes policies to corporatist efforts to stimulate productive entrepreneurship – so the City’s capture of the state has ended in the current calamity. It has created a world of too many Philip Greens and too few James Dysons. The short-term structure of bank lending, the unwillingness to finance innovation, the creation of an ‘asset management’ industry that is more interested in buying and selling companies than exercising ownership responsibilities, excessive takeovers, sky-high fees and commissions and the sheer size of the City – attracting capital inflows that buoy up sterling – comprise a formidable anti-investment and anti-innovation structure.

More: The 10,000-Year Rise of the World Economy
by Philip Coggan
Published 6 Feb 2020

If capital was free to move, it could be invested in the most profitable opportunities around the world, and this would improve economic growth in the long term. Investors would also act as a source of discipline on spendthrift governments, demanding higher yields before lending them money. Politicians began to fear the “bond market vigilantes”. The asset management industry matured in this era. Fund managers look after the money of individuals and institutions, and offer the benefits of diversification. By pooling assets, they can spread their portfolios across a wide variety of securities and reduce the risk that any one investment goes wrong. Many fund managers also claim to have the skill to outperform the overall market, by beating the index, but very few have consistently been able to do so.

Aftershocks: Pandemic Politics and the End of the Old International Order
by Colin Kahl and Thomas Wright
Published 23 Aug 2021

In a typical crisis they would buy Treasuries as part of a rush to safety, but now they sold in large volumes. One possible reason is that they were required to have a certain balance of products in their portfolios—say, 70 percent in shares and the rest in bonds. As equity prices fell, they had to try to rebalance their portfolios. Meanwhile, the asset management industry—including Wall Street giants such as BlackRock—liquidated their Treasuries to an unprecedented degree. Many hoped these mutual funds could help the system absorb a shock by buying assets when others would not, but instead they joined the panic and were an amplifier of stress. These funds faced a “liquidity gap”—more fund investors than expected wanted their money back, and because the funds could not liquidate their other assets quickly enough, they had to sell the Treasuries in their portfolios.

Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State
by Paul Tucker
Published 21 Apr 2018

“The Congressional-Bureaucratic System: A Principal-Agent Perspective (with Applications to the SEC).” Public Choice 44, no. 1, Carnegie Papers on Political Economy (1984): 147–91. Wheeler, Chris. “A Response to the 2013 Whitmore Lecture address.” Australian Law Journal 88 (2014). White, Mary Jo. “Enhancing Risk Monitoring and Regulatory Safeguards for the Asset Management Industry.” December 11, 2014. Securities and Exchange Commission. Williams, Bernard. In the Beginning Was the Deed, edited by Geoffrey Hawthorne. Princeton, NJ: Princeton University Press, 2005. Williamson, John. “What Washington Means by Policy Reform?” Peterson Institute for International Economics, 1989.

The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite
by Daniel Markovits
Published 14 Sep 2019

KPMG reported making $26.4 billion in the financial year ending September 30, 2017. KPMG International Cooperative, 2017 International Annual Review, accessed July 20, 2018, https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2017/12/international-annual-review-2017.pdf. the revenues of the ten largest: For more on the growth hedge fund and asset management industries and thus of income defense, see Robin Greenwood and David Sharfstein, “The Growth of Finance,” Journal of Economic Perspectives 27, no. 2 (Spring 2013): 3–28, www.people.hbs.edu/dscharfstein/Growth_of_Finance_JEP.pdf. Hereafter cited as Greenwood and Sharfstein, “The Growth of Finance.” According to this view: See Winters, Oligarchy, 24.

MONEY Master the Game: 7 Simple Steps to Financial Freedom
by Tony Robbins
Published 18 Nov 2014

At this stage we will ski down the mountain and enjoy ourselves. Spending time with the ones we love, building our legacy, and making a difference. It’s during this phase that we will eliminate the number one fear of baby boomers: the fear of outliving our money. This second phase is rarely discussed by the asset management industry, which is focused on keeping money invested. “It’s not about having some arbitrary amount of money in your account on some given day,” exclaimed Dr. Jeffrey Brown, professor of finance at the University of Illinois and consultant to the US Treasury and the World Bank. “I think a lot of people are going to get to retirement and suddenly wake up and realize, ‘You know what?

Crashed: How a Decade of Financial Crises Changed the World
by Adam Tooze
Published 31 Jul 2018

Wigglesworth, “Zambia Makes Bond Market Return,” Financial Times, April 7, 2014. 8. “The Dollar’s Strength Is a Problem for the World,” Economist, December 3, 2016. 9. K. Miyajima and I. Shim, “Asset Managers in Emerging Market Economies,” BIS Quarterly Review, September 14, 2014. 10. IMF, “The Asset Management Industry and Financial Stability: Chapter 3,” Global Financial Stability Report: Navigating Monetary Policy Challenges and Managing Risks, April 2015. 11. IMF, Global Financial Stability Report, April 2015. 12. “The Never-Ending Story,” Economist, November 14, 2015. 13. On the global credit cycle see the highly influential paper by Hélène Rey, originally delivered in August 2013 at Jackson Hole, “Dilemma Not Trilemma: The Global Financial Cycle and Monetary Policy Independence” (NBER Working Paper 21162, May 2015).

Corporate Finance: Theory and Practice
by Pierre Vernimmen , Pascal Quiry , Maurizio Dallocchio , Yann le Fur and Antonio Salvi
Published 16 Oct 2017

Only portfolios located on a line passing through M and on a tangent to the efficient frontier are optimal. The others, such as portfolio alpha, are suboptimal. Section 18.9 How portfolio management works The financial theory described so far seems to give a clear suggestion: invest only in highly diversified mutual funds and in government bonds. The asset management industry is one of the most important industries in the modern economy, managing €41 000bn worldwide (40% of this amount being invested in stock markets). Managers are employees of banks, insurance companies or independent. *Year of break in the statistical perimeter Source: Efama However, as our readers know, not all investors subscribe to this theory.