A few interesting charts from LSEG

 A few other relevant charts from this report.

44, 45 & 46. Largest Mutual Funds - Contd

Here is an indicative chart of largest mutual funds:

The top fund here is Vanguard's VSMPX at $1.7 trillion net assets (31/3/25). Next seems to be Fidelity's FXAIX (500 Index Fund) with $597.6 billion net assets. Perhaps Vanguard's other two funds are larger than Fidelity.

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What I find interesting is that $1.7 trillion is larger than entire assets of the largest asset owner in the world (Govt Pension Fund Japan with $1.6 trillion). And overall Vanguard seems to manage $8.6 trillion.


Vanguard manages ~435 funds. "As of July 2024, Vanguard has 208 U.S. funds and 215 international funds available. The firm boasts more than 50 million investors" It also has one of the largest bond funds in the world, the Vanguard Total Bond Market Index Fund (VBTLX).


It says $ 10.1 trillion AUM as per their website. But seems like $8.6 trillion per some other sources. " Vanguard's total assets under management (AUM) increased more than eightfold in the roughly two decades since 2005, reaching a value of 8.6 trillion U.S. dollars. "

Bogle created Vanguard and molded it into a place where retail and individual investors could turn to build wealth without needing the services of a broker and the expenses charged by them. His vision was low-cost investing and transparency for non-institutional investors.

According to the Vanguard Group, the company is owned by its member funds, which are owned by the fund shareholders. Thus, the fund shareholders are the owners of Vanguard

Following is an intro to Vanguard:

Blackrock, the largest asset manager has ~$11.55 trillion assets under management. "The total assets under management of BlackRock Inc. more than doubled between 2016 and 2025, reaching a value which makes them the world’s largest asset management company."

BlackRock, Inc., founded in 1988, has grown to become the world's largest asset manager. Its journey is a testament to its strategic foresight, innovative approach, and ability to adapt to the evolving financial landscape. From managing $53 billion in assets in 1994, BlackRock has seen its assets under management (AUM) surge to an astounding $11,551 billion by 2024. This remarkable growth represents a compounded annual growth rate (CAGR) of 20%.

BlackRock went public in 1999. Acquired Merrill Lynch Investment Management in 2006 and Barclays Global Investors in 2009.

There are over 1,000 individual investment funds operated by Blackrock, and investors are able to purchase shares in both actively and passively managed funds. 

The main type of financial assets BlackRock invests in are equity securities typically in the form of stocks and shares, comprising the vast majority of the company’s portfolio. This is followed by fixed-income assets such as bonds, then cash, and alternative investments such as real estate and commodities. Over half of these assets are owned by clients residing in the Americas.

Following is Blackrock clients of whose assets they manage:

Following is the market share per Blackrock:

 

Between Blackrock and Vanguard, they have $21.6 trillion under management.

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Blackrock is listed with market cap of $140 billion, revenue of $21 billion. Here perhaps a look at Blackrock's shareholders: 

According to the data from MarketBeat as of 18 February 2025, 80.69% of BLK shares were owned by institutional investors – including institutions such as Merill Lynch, which merged with BlackRock in 2006. This means that over half of the Blackrock Inc shareholders are investment firms and asset managers, similar to BlackRock, which hold shares on behalf of their clients. 

According to data compiled by WallStreetZen as of 19 February 2025:

Vanguard group owns 8.64% - largest shareholder
State Street Corp owns 4.07%
Temasek Holdings owns 3.29%
Charles Schwab Invesement Management owns 2.22%
Geode Capital management owns 1.94%

Laurence D. Fink is the co-founder, Chairman, and CEO of BlackRock – and its largest individual shareholder as of 19 February 2025, with 520,124 shares – although, the firm remains primarily owned by institutional investors.

Since establishing the business in 1988, Fink has overseen BlackRock’s growth into the world’s largest asset manager, 

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Following from 2017 news clip when between them they managed $11 trillion.

Investors from individuals to large institutions such as pension and hedge funds have flocked to this duo, won over in part by their low-cost funds and breadth of offerings. The proliferation of exchange-traded funds is also supercharging these firms and will likely continue to do so.

None other than Vanguard founder Jack Bogle, widely regarded as the father of the index fund, is raising the prospect that too much money is in too few hands, with BlackRock, Vanguard and State Street Corp. together owning significant stakes in the biggest U.S. companies.

"That’s about 20 percent owned by this oligopoly of three," Bogle said at a Nov. 28 appearance at the Council on Foreign Relations in New York. "It is too bad that there aren’t more people in the index-fund business.”

While bigger may be better for the fund giants, passive funds may be blurring the inherent value of securities, implied in a company’s earnings or cash flow.  The argument goes like this: The number of indexes now outstrips U.S. stocks, with the eruption of passive funds driving demand for securities within these benchmarks, rather than for the broader universe of stocks and bonds. That could inflate or depress the price of these securities versus similar un-indexed assets, which may create bubbles and volatile price movements.

Another concern is that without the prospect of being part of an index, fewer small or mid-sized companies have an incentive to go public, according to Larry Tabb, founder of Tabb Group LLC, a New York-based firm that analyzes the structure of financial markets. That’s because their stock risks underperforming without the inclusion in an index or an ETF, he said. Benchmarks are governed by rules or a methodology for selection and some require that a security has a certain size or liquidity for inclusion.

Roughly 37 percent of assets in U.S.-domiciled equity funds are managed passively, up from 19 percent in 2009, according to Savita Subramanian at Bank of America Corp. By contrast, in Japan, nearly 70 percent of domestically focused equity funds are passively managed, suggesting the U.S. can stomach more indexing before market efficiency suffers.

The firms are among the biggest holders of some of the world’s largest companies across a range of industries including Google parent Alphabet Inc.and Facebook Inc. in technology, and lenders like Wells Fargo & Co.

In the U.S., both companies supported or didn’t oppose 96 percent of management resolutions on board directors in the year ended June 30, according to their own reports.

One of the questionable or controversial/ discussed thing that came out from above 2017 news:

That’s making regulators uneasy, with SEC Commissioner Kara Stein asking in February: “Does ownership concentration affect the willingness of companies to compete?”

“As BlackRock and Vanguard grow, and as money flows from active to large passive investors, their percentage share of every firm increases,” said Jose Azar in an interview. “If they cross the 10 percent threshold, I think for many people that would make it clearer that the growth of large asset managers could create serious concerns for competition in many industries.”

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The next two players are Fidelity ($4.5 trillion) and State Street Advisors ($4.1 trillion).

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A note on ETF.

Currently ~$15 trillion market representing <3% of global fixed income and <9% of global equities.

For reference, following are the global Equity markets ($115 trillion) and global fixed income markets ($ 141 trillion):

Perhaps here, a comparison of 10 years 2013 => 2023

And perhaps to put these two pie charts in context, here is a larger context:

The rates market here perhaps includes the fixed income market. As per chart following (the non OTC portion maybe?)

Fixed Income is also included in the Credit markets in the quadrillion pie: From corporate bonds to credit derivatives (??), to structured finance, syndicated loans, the market has tripled in size in 5-6 years.

Of the corporate bonds, $18 trillion is those issued by Financials and $22 trillion by non-financials.

Perhaps here worth noting that the Credit Derivatives market is at 8.7 trillion (not perhaps the 18 mentioned in chart above). It used to be $51.9 trillion in 2008, and is now at 8.7 trillion:

Following is the breakdown of loan funding:  (which I find a strange chart ... such changes in five years? Or perhaps this shows only a particular portion of market) -

Following is the new issuance in structured finance:

Structured finance is mainly (85%) for auto and equipment, credit card and other consumer items, micro and small enterprises. 

A few other charts from the same pack: (next post)

More relevant here are ETF and Derivatives on ETF:

How is ETF options bigger market than Equity ETF (?)

For a comparison of Fixed Income to Equity - new issuance:  (Although these are not really comparable except perhaps to see new issue. Because equity issue is almost perpetual while fixed income gets retired/repaid periodically).

Another way to consider mutual funds is to consider how households invest in them. US, which is the largest financial market in the world has ~$66.4 trillion in household liquid financial assets. Which is invested as follows:  

Apart from this liquid wealth of $66.4 trillion, around $44 trillion is the total US Retirement Assets.

The breakout of total U.S. retirement assets was:

IRAs 30.3%

Private pensions 28.9%

Annuities 9.3%

Government pension assets (federal, state, and local) 31.5%

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To explore -

• Composition of largest mutual fund
• Other large Mutual Funds
• Ownership by Mutual Funds of large companies
• ETFs and the changing investments market

42 & 43. Largest Mutual Funds

As of Feb 2025, the total global market cap was USD 123.6 trillion.

Top 500 managers amounted USD 113.7 trillion AUM at the end of 2022.

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First, for context => Largest Asset Owners.

 At the end of 2023, the top 100 asset owners managed a total of US$ 26.3 trillion in assets (AUM)

The top 3 asset owners remained unchanged: Japan´s Government Pension Investment Fund (GPIF) retained its position as the world´s largest asset owner (AUM of US$1.6 trillion), followed by Norway's Norges Bank Investment Management (AUM of US$1.5 trillion) and China Investment Corporation in third place (AUM of US$1.2 trillion)

Pension funds manage 51.2% of the total AUM, Sovereign wealth funds handle 38.9%, and outsourced CIOs and master trusts are responsible for 9.3% of total AUM.

Following for the top 100

Following is the list of 10 largest Pension Funds, SWF, OCIO

In terms of investment preference, consider the following charts:

The above are the primary pools of capital in a way. Following are SIP, which are:

• State Investment Platforms are institutional investors which are entrusted with managing and investing a pool of capital from various depositors or funds; and are usually based in one country.
• These depositors/funds can range from pension funds, insurance plans, sovereign wealth funds, endowment funds and other organisations. SIP governance structures are impacted by each  depositor's investment policies
• State Investment Platforms should not be considered as a mutually exclusive category like the ones examined in above sections of this report, but as an additional layer to understand the nature of some funds
• The considerable size of AUMs of these platforms is why they warrant special consideration in our report

Following are the largest SIPs and their asset allocation:

Following are foundations and endowments (top 10 - only 1 of them is in 100 largest asset owners), and top 10 insurance funds (none of which are in top 100)

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Back to Asset Managers. Top 500:

Here's an indicative split to show the weight that the top managers control:

And although the AUM has grown fastest in China, Norway, India, as a proportion of total assets, these are still small markets compared to the AUM in North America.

Following is the split by asset class and then by vehicle (Vehicle results are survey basis and directional only):

Following are the top asset managers:

The highest is managed by Blackrock with $8.5 trillion. For comparison, the 100th is BMO Wealth Management with $225 billion under management and the 500th is SulAmerica with around $10.3 billion under management.

The above are largest asset managers.

Now to Mutual Funds

A mutual fund is an investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV in Europe ('investment company with variable capital'), and the open-ended investment company (OEIC) in the UK.

Mutual funds are often classified by their principal investments: money market funds, bond or fixed income funds, stock or equity funds, or hybrid funds.[1] Funds may also be categorized as index funds, which are passively managed funds that track the performance of an index, such as a stock market index or bond market index, or actively managed funds, which seek to outperform stock market indices but generally charge higher fees. The primary structures of mutual funds are open-end funds, closed-end funds, and unit investment trusts. Over long durations, passively managed funds consistently outperform actively managed funds.(? data)

Mutual funds have advantages and disadvantages compared to direct investing in individual securities. The advantages of mutual funds include economies of scale, diversification, liquidity, and professional management.[6] As with other types of investment, investing in mutual funds involves various fees and expenses.

Mutual funds are regulated by governmental bodies and are required to publish information including performance, comparisons of performance to benchmarks, fees charged, and securities held. A single mutual fund may have several share classes, for which larger investors pay lower fees.

Hedge funds and exchange-traded funds are not typically referred to as mutual funds, and each is targeted at different investors, with hedge funds being available only to high-net-worth individuals

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In terms of management of different funds

Perhaps here a little historical context:

The mutual fund industry has undergone tremendous change since 1945. 

The size and the number of funds available: What was a small industry (68, largely stock-oriented funds in 1945) with less than $1 billion in assets has become a giant, with assets now spread over a $7 trillion array of 8,000 stock, bond, and money market funds. (in 2019)

Stock funds in 1945 were largely large-capitalization blend funds that offered broad diversification, and for the most part, they were suitable to be held as the sole component of an investor’s equity investment portfolio. Today, “style box” investing has become the name of the game. Investors are able to slice and dice their equity fund investments into any number of styles and sectors.

Fund holding periods have declined dramatically: From the 1940s until the mid-1960s, equity mutual funds were long-term investors that turned their portfolios over at an annual rate of less than 20 percent. They have gradually become short-term speculators that now turn their portfolios over at an annual rate of more than 100 percent.

The mutual fund industry’s ownership of Corporate America: In 1945, the mutual fund industry controlled barely more than 1 percent of all U.S. equities. Today, that figure is nearly 25 percent. The mutual fund industry has become the proverbial 800-pound gorilla. It could sit anywhere it wants at the corporate board table, but it rarely even attends the meetings.

The costs of fund ownership have risen dramatically: Total mutual fund assets have increased 3,600-fold since 1945, but mutual fund fees and operating expenses have increased 6,600-fold in that same period—a stunning rise, particularly in an industry that is characterized by tremendous economies of scale.

Following are the top 25 mutual funds

The top fund here is Vanguard's VSMPX at $1.7 trillion net assets (31/3/25)

Next is Fidelity's FXAIX (500 Index Fund) with $597.6 billion net assets.

Perhaps Vanguard's other two funds are larger than Fidelity.