Who are the “Fantastic 4” of savings. And how powerful are – Corriere.it

a small club. very special. Of the gentlemen of the world stock exchanges. It is a small group of managers that control the vast majority of the world’s financial markets. And apparently with American traction. The director goes through the funds of BlackRock, Vanguard, State Street, Fidelity and a few other entities. These companies are the main shareholders of the most important global companies. Nothing escapes their net. We move from hi-tech to pharmaceuticals, from arms manufacturers to major world banks. Without neglecting rating agencies. They control about 20% of the entire S&P 500 index and, in less than twenty years, will have more than 40% of the votes on the boards. His growth is dizzying. In ten years, more than 80% of the capital assigned to the fund ended up in their hands.

chief crisis advisor

But who are these real savings giants? Let’s start with RocciaNera. BlackRock, ruled by Lawrence Douglas (acquaintance Larry) Fink, reigns as the undisputed sovereign in the world of savings. It has $10 trillion in assets under management. So influential is BlackRock that its consulting division won the contract in April 2020 to run the Federal Reserve’s economic stimulus program (in the midst of a health crisis triggered by the pandemic). In the 2016 and 2018 stress tests, BlackRock and Vanguard were the EBA’s consulting firms, despite the banks having stakes to watch. In addition RocciaNera was appointed by the European Commission as an advisor for financial options with regard to the ecological sustainability of investments. BlackRock’s success is based on a data analytics system called Aladdin, which means Asset, Liability, Debt and Derivative Investment Network, This sophisticated software is controlled by five thousand mainframes in four unknown locations and performs 200 million macro and micro calculations per week. Another part of Aladdin is made up of over 2,000 IT experts and analysts who evaluate economic and business data on a daily basis. In addition to 10 trillion in in-group financial products, Aladdin also oversees the development of an investment portfolio of approximately 30,000. This advisory business represents approximately 10% of the global business, which includes over 200 pension funds, banks, insurance companies, foundations and other institutional investors. A Curiosity: Another success factor is manager Alister Hibbert. Although many of the group’s employees don’t even know who he is, he is the true King Midas of the company. Hibbert, second bloomberg, BlackRock’s highest-paid person, whose salary is more than Fink’s own. The fund’s returns, the BlackRock Strategic Equity Hedge, are the basis of its fortunes.

shareholder’s shareholder

We find the pawn in the exclusive circle of the most important managers. With assets of more than $8,400 billion, the index fund’s principal administrator, Mortimer J. Buckley-headed company. Vanguard has been characterized by a strong approach to passive management since its inception. The group was created in 1975 by John C. Bogle (the man who designed the first indexing product). The successors expanded the offering, distributing both ETFs and actively managed funds. Unlike other managers, Vanguard is not listed. The company is controlled by its own funds which are subscribed by savers or institutional investors. Some experts believe that this structure protects against conflicts of interest. It should be remembered that Vanguard is the main shareholder of BlackRock (11%), Fidelity (9.7) and State Street (9.4). State Street and Fidelity compete for third place in this particular ranking. The latter company, led by Anne Helen Richards of Scotland and managing assets of more than three trillion euros, supplies its products to customers with the aim of long-term performance. State Street Global, Joseph L. Under the leadership of Hule, was founded in 1792. With approximately $3.5 trillion in assets and more than $35 trillion in custody and administration, the principal institutional asset manager. This is the state of the art. But not everything that shines is gold. Wall Street began to question whether such concentration of power could not be dangerous. The managers of these savings giants are actually major shareholders in all of the world’s most important companies, especially those with wide shareholdings. It is no coincidence that many public regulators, starting with the US Department of Justice and the Federal Trade Commission, are attentive to compliance with antitrust laws, conflicts of interest and any manipulation of the markets. It is clear that such a force can inspire respect on the part of top managers. With the possibility, if not to influence the choices, then at least to make decisions in line with the will of the managers. In fact, there is a delicate balance between the choice of managers and the value of the stock, as stock options now represent a significant portion of their remuneration.

Too much activity?

After the great crisis of 2008, there has been much discussion about the concentration of power for banks to try to introduce rules that include their burden. today’s giants shadow banking They bypassed the credit system, creating a powerful financial elite. Large economic institutions such as the Financial Stability Board and the IMF have had to acknowledge that the non-bank financial system has overtaken the traditional asset management structure. But then why not intervene? The simplest objection is that savers invest their money freely. It is therefore common for them to focus on passive funds and ETFs that apply low commissions because they replicate the performance of the index without relying on a classic manager. Charlie Munger, Warren Buffett’s longtime partner at Berkshire Hathaway, said: “We have a new group of monarchs, the people who vote for stocks to be owned by index funds. I think about Fink’s world and I’m not sure I want him as my emperor. A reflection that is beginning to find supporters. The main allegation is that inactive managers have become active. And it doesn’t stop there. Instead of pushing companies for higher returns, they are trying to impose their political agenda. At the meeting, the boards run the risk of finding themselves in the minority if they refuse to accept BlackRock & Co.’s view on climate and the so-called capitalism of stakeholders (the principle that shareholders, in addition to the interests) of climate, personnel and other social partners). Two years ago Fink wrote a letter to CEOs threatening to vote against managers if they did not follow the signs of transparency in environmental, social and governance matters set by the Sustainability Accounting Standards Board. But that’s not enough. This year, Fink led the directors in stating that employees increasingly view their employers as the most reliable, knowledgeable and ethical source of information, and that stakeholders including employees, customers, communities and regulators need to know Where are the social issues of our companies? In short, another blow to the ears. Sure, technology has standardized finance, but we know Wall Street doesn’t like too few reins.