Asset Management or asset management companies have a major role in providing investment services to the public, both for individual investors and companies. At least, with the help of asset managers, investment fund management owned by investors will be better and lower risk. Because every asset manager manages the managed fund in a professional way, so that in the process, important matters such as risk cannot be ignored.
Not only that, the importance of asset managers, because they are the parties that also determine sentiment in the financial market, especially the capital market. As we know, transactions made by companies have a very large volume compared to transactions from individual investors. And the transaction volume basically comes from investors’ funds.
An asset management company usually allocates investors’ funds to several different securities. Asset managers can manage investment assets in the form of Mutual Funds, ETFs and even risky investments like hedge funds. That is, they don’t even just accept funds from ordinary public investors, but specifically provide investment services for wealthy individuals and manage their investment portfolios with complete control.
This article will discuss some of the largest asset management companies in the world based on the assets they manage (AUM). However, prior to the main discussion, let’s discuss what is meant by asset managers and how do they work?
What is an Asset Manager?
An Asset Management Company or asset management company is a financial services company that manages public investment funds, both from individual investors and companies. Asset managers usually issue closed-end investment funds that can be traded on the capital market like shares of a company. In addition, asset managers can also accept open-ended investment funds, such as mutual funds, ETFs, hedges and the like.
An asset manager company works to manage investors’ investment assets in a professional manner. Generally they will charge a service fee with varying amounts based on the size of the capital submitted. And investors will get a net investment return after deducting these costs.
However, that is not the only source of profit for asset managers. Most asset management companies also have other business lines, such as brokerage services and market makers or liquidity providers.
Asset managers manage funds from various investors known as Asset Under Management (AUM). The AUM size is an indicator that shows how much a client or investor invests in the asset manager company. Some argue that the size of AUM also shows the quality of service from the asset manager. However, basically the size of AUM cannot objectively provide value to service quality.
The 5 Largest Asset Management Companies in the World Based on AUM
The list below is the 5 largest Asset Manager companies in the world. In ordinary companies, the valuation method used will probably look at the total assets owned by the company or market capitalization. But, because this is an asset management company, the method used is to look at the total funds they manage or Asset Under Management (AUM).
AUM data is data reported in March 2022. There may be some changes due to market fluctuations or increasing or decreasing investor confidence in the company. However, since it’s still the same year, the changes probably won’t be so significant as to change the overall ranking.
Here are the 5 Biggest Asset Manager companies based on AUM:
1.Black Rock Fund
Black Rock Fund takes first place with a total AUM of 10.01 trillion US dollars. Black Rock is also one of the largest financial companies in the world. The company was founded in 1988 and IPO in 1999.
Black Rock’s role is not only limited to an asset manager institution that manages investors’ investment funds. Black Rock was even mentioned as one of the influences on the popularity of ETFs and encouraged investment growth in these instruments through the i-shares product.
2. Vanguard
Vanguard Group is an investment advisory company based in the United States. This company is in second place as an asset manager with the largest AUM in the world. Vanguard Group’s total AUM is $8.1 trillion.
Vanguard Group was founded in 1975, and is headquartered in Valley Forge, Pennsylvania, America. This company is known for its passive investment strategy and emphasizes the low investment risk side.
3.Charles Schwab
Charles Schwab is an American company engaged in the field of financial services, such as commercial banking, brokerage, consulting and asset managers. This company is a multinational financial company headquartered in Westlake, Texas, America.
Charles Schwab is in 3rd place with a total AUM of US$7.98 trillion, based on a report in March 2022. Meanwhile, the data update for August 2022 shows the company’s total AUM has decreased to US$7.13 trillion.
4. J.P. Morgan
Many people think that JP Morgan is just an investment bank, but it’s not. They also provide services as asset managers, issuing Mutual Funds as well as ETFs for public investors.
JP Morgan ranks as the 4th largest asset manager in the world based on total AUM. The total AUM reported in March 2022 shows that JP Morgan has assets under management of USD 7.11 trillion, slightly lower than Charles Schwab.
5. Fidelity Investment
Fidelity Investment is a financial services company headquartered in Boston, Massachusetts, America. This company is a multinational company with a number of subsidiaries. Fidelity provides a variety of financial services ranging from brokerage, managing mutual funds, investment consultants, asset management, life insurance and so on.
Fidelity Investment ranks 5th as the largest investment management company based on Asset Under Management (AUM). Fidelity has a total AUM of US$4.2 trillion based on March 2022 data.
Conclusion
So, these 5 companies are asset managers with the top total AUM in the world. The rating may change considering that AUM data is data for March 2022. However, data changes may not be significant so that they change the entire existing rating. In addition, the list of companies does not indicate the quality of the services they provide. So it cannot be concluded that the top rank is the best company and the bottom rank is the worst.
