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5 - Giant Asset Managers, the Big Three, and Index Investing

Published online by Cambridge University Press:  31 August 2024

Luca Enriques
Affiliation:
University of Oxford
Giovanni Strampelli
Affiliation:
Università Commerciale Luigi Bocconi, Milan
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Summary

A robust literature describes the incentives and stewardship practices of the “Big Three” asset managers (BlackRock, Vanguard, and State Street Global Advisors), often referring to these asset managers as “passive.” This is so common that the “Big Three,” “index fund,” and “passive manager” are used almost interchangeably by both academics and practitioners. This shorthand emerged in the foundational scholarship in this area, and while it may remain useful in certain contexts, its casual use obscures important features of the market and contributes to misperceptions. In this chapter, we demonstrate that it is a mistake to equate passive investing with index funds; index funds with the Big Three; and the Big Three with giant asset managers. We further sketch some of the consequences of these distinctions and set forth questions for further research.

Type
Chapter
Information
Board-Shareholder Dialogue
Policy Debate, Legal Constraints and Best Practices
, pp. 158 - 184
Publisher: Cambridge University Press
Print publication year: 2024

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