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industry consolidation swells trillion dollar club

Industry consolidation has gathered pace since the banking crisis in 2008, the study notes, when investors “took $10trn off the table in the space of a few months”. Brand and balance sheet strength have taken precedence in an environment of heightened risk aversion, benefiting larger, well-capitalised managers.

The report finds that the number of trillion-dollar groups grew from nine to 11 last year, while the number of companies with more than $2trn doubled, from two to four. BlackRock remained the biggest money manager by some margin, and the only group to run more than $3trn (see table).

Top ten managers by global AUM ($bn)
Rank Company AUM
1 BlackRock 3,792.0
2 State Street Global 2,086.0
3 Vanguard Group 2,000.0
=3 Pimco 2,000.0
5 Fidelity Investments 1,690.9
6 Axa Group 1,474.8
7 JP Morgan Asset Management 1,400.0
8 Bank of New York Mellon 1,386.0
9 Deutsche Asset Management 1,247.5
10 Capital Group 1,081.7

Concentration is also apparent at a national level, according to Cerulli. The top ten firms accounted for more than 70% of retail assets in six out of ten countries, for example, and for more than 70% of retirement assets in seven out of ten markets.

Shiv Taneja, Cerulli’s London-based managing director for international research, warned that the rising dominance of a small group of large players could have negative consequences for investors if left unchecked. “Big firms can do many good – and not so good – things,” Taneja wrote.

“Regulators have a huge role to play here, and in their desire to boost investor protection (a good thing) should ensure they do not make it tough on smaller firms.”

As Expert Investor Europe reported, BlackRock’s growing strength in Europe has been documented in several studies. Lipper this year found that some 1,250 European funds of funds are using strategies managed by BlackRock, while a separate review by the company revealed that the US giant topped the estimated European net fund sales chart in the first six months of 2013.

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