Worldwide investment assets dropped 6% in the third quarter of 2015 as inflows slowed due to concerns about the Federal Reserve's monetary tightening, worries about China and the overall state of increasingly volatile markets. Hedge fund assets also were pummeled, with the greatest percentage fall in assets under management (AUM) since the financial collapse in 2008.

However, in terms of the biggest asset managers, there wasn't much change in the ranking of the top five; Allianz fell, dragged down by the debacle at its PIMCO subsidiary.

BlackRock

BlackRock Inc. (NYSE: BLK) remained the biggest asset manager in the world in 2015, with AUM of more than $4.5 trillion. Larry Fink, the current chief executive officer (CEO), co-founded BlackRock in 1988. The company employs 10,000 people managing investments for individuals, corporations, governments and pension funds. Investment vehicles include a broad range of mutual funds and exchange-traded funds (ETFs). The investment philosophy is more active compared to Vanguard, which emphasizes a passive style. BlackRock tried to push into the hedge fund world in the last few years, but that attempt resulted in a clear failure for a macro-oriented fund that was eventually shut down.

Vanguard

2015 was a great year for Vanguard, as investors threw in the towel on active portfolio management and embraced an index-investment philosophy. The company received a record $236 billion inflow, and that is after a $215 billion inflow in 2014. Vanguard's passive lower-cost approach is obviously becoming more appealing to frustrated retail investors after a difficult year for markets in 2015. Through November 2015, investors put $361.8 billion into index funds and withdrew $139.5 billion from actively managed stock and bond funds. Vanguard's AUM is over $3.3 trillion, and it serves individuals and corporate accounts.

State Street Global Advisors

State Street Global Advisors is one of many investment firms based in Boston, and it has $2.3 trillion in AUM. Clients include individuals, pension plans, endowments and foundations, sovereign funds, central banks and intermediary investors. The company provides its clients with an extensive range of actively and passively managed mutual funds. It has a history of innovation, launching the first sector-specific ETFs in 1998. It also provides regulatory, financial and tax-reporting services to other asset managers.

Fidelity Investments

From Peter Lynch to Jeff Vinik to Will Danoff, the name " Fidelity Investments" has been synonymous with mutual funds for decades. The company manages over $2.1 trillion, emphasizing active portfolio management more than Vanguard, although it has a broad range of index funds. During the bubbling stock bull market of the 1990s, Fidelity was far ahead of Vanguard in AUM. However, the burst of the technology bubble in 2000, followed by the financial implosion in 2008, pushed more individuals toward the passive index approach, and Vanguard's popularity soared. Today, Fidelity is also heavily involved in corporate and small business pension plans, annuities and its online stock trading site.

Allianz

Allianz is a global financial services company with services in the insurance and asset management business. It was founded in Berlin in 1890, and it currently has about $2 trillion in AUM. Many observers believe that its greatest mistake of the past century was purchasing Pacific Investment Management Company (PIMCO) based on Bill Gross's record and reputation. Gross subsequently flamed out, and assets drained from the PIMCO Total Return Fund that he had managed for decades. The fund bled $19.4 billion and 13.5% of its assets in December 2015 alone. Allianz provides asset management for individuals and institutions, property and casualty insurance, and lending and consulting to corporations.

Summing Up

Today, the latest trend in asset management is index investing, and Vanguard gobbles up a huge percentage of asset flows. If the market malaise of 2016 departs, the move back to active asset management may return.

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