Avendus Capital Large Cap ESG – PMS Strategy Introduction by Mr.Andrew Holland & Mr. Abhay Laijawala
BlackRock, Vanguard and State Street manage $ 15 trillion in total assets, equivalent to more than three quarters of the size of the U.S. economy.
Fast growth «Big three» (Big Three), partly caused by increase in cheap ETFs, gives them a huge impact on financial markets and the priority position of corporate America.
BlackRock, State Street and Vanguard are the largest owners of 88% of S companies&P 500. For example, they hold leading stakes in companies such as Apple, Jp morgan chase and Pfizer.
Some experts believe that these financial corporations have become too strong and the administration Joe biden together with Congress it is necessary to curb them.
«It’s time for the authorities to think about how to limit their market share», – said Graham Steele, author of an article about the American Economic Liberties Project.
The document calls for effective mitigation «Big three» by revising the law «About wall street reform» 2010 year.
Steele, a former employee of the Federal Reserve Bank of San Francisco, hopes the Biden administration will examine his potential solutions. In doing so, he acknowledged that corporations would resist and «without a fight» do not take them.
Nevertheless, it is not yet clear how Washington generally views this problem, especially after the efforts of the administration Barack obama by limiting the power of fund managers were blocked. New Administration Expected To Focus On Fighting Pandemic, Economic Recovery And Climate Crisis. If antitrust efforts are made during the Biden era, they are likely to focus on Big Tech, rather than the monopoly position of BlackRock, State Street and Vanguard..
«We fundamentally disagree with the findings of this article (American Economic Liberties Project) and its recommendations, which, in our opinion, will harm investors», – State Street said in a statement.
BlackRock, the world’s largest asset manager, has at least 5% stake in 97.5% of S companies&P 500, the document says.
BlackRock manages over $ 87 billion in fossil fuel companies and opposes or refrains from 80% of climate-related proposals from shareholders of these companies between 2015 and 2019, the document says..
BlackRock is so powerful that the federal government has asked for its help during each of the last two recessions.. In March, the regulator connected BlackRock to control the first of its kind to buy corporate debt, including junk bonds.
«Access to such resources likely means that BlackRock has touched the lives of most Americans in one way or another. — whether they know about it or not, that’s another question», – wrote Steele.
BlackRock said in a statement that the document «contains many factual inaccuracies and misconceptions» about the company and the industry.
«We welcome constructive dialogues about the role of asset managers and the benefits we bring to financial markets and society at large», – the message says.
«However, we are concerned that the document calls for proposals that will harm investors and companies. Graham Steele’s initiative could negatively impact our efforts, which will benefit the millions of people saving for retirement and other financial goals.», – added to BlackRock.
«Big three» – these are the heavyweights in the ETF industry. BlackRock iShares platform alone managed $ 2.3 trillion as of the end of September. The SPDR State Street ETF alliance and Vanguard ETFs are also very influential.
«Big three» is responsible for 73% – 80% of the global ETF market and sponsors 45 of the 50 largest funds, the document says.
Of course, there is no doubt that investors have benefited from the growth of ETFs that charge lower fees and commissions.. This is why they became so popular..
«Vanguard has taken a big step by focusing on lowering costs for investors exercising caution in product development, offering only funds that meet a sustainable long-term need, and encouraging responsible investing. We take our role as a steward of our clients’ investments seriously and are grateful for their continued trust in their savings to Vanguard.», – the corporation said in a statement.
Steele’s paper outlines steps Washington can take to limit the power of the fund industry.
«The colossal influence of several large financial companies poses new challenges to the governance of corporate America, the competitiveness of our economy, the concentration of political power, and the stability of financial markets.», – notes Steele.
He said that Congress should place restrictions on common property that would prevent possession large stakes in some industries.
The Financial Stability Oversight Council (FSOC) may also be involved in this matter..
Steele thinks FSOC should define platform and custody services «Big three», as systemically important market utilities. This will pave the way for more regulatory oversight.. Current legislation needs to be changed to be able to separate strategically important infrastructure activities from other businesses.
After months of lobbying during the Barak era Obama – BlackRock and other major asset managers avoided major reforms in 2014.
«The Obama administration’s FSOC have lost their battle against fund managers. Doubt Biden’s team will decide to take this slippery slope again», – said Isaac Boltanski, Director of Policy Research at Compass Point Research and Trading.