Over $1 trillion moved into the global stock market last year. That was more than the previous 20 years combined. Among the causes was access to cash at very low interest rates, largely because of the Federal Reserve. Another reason may be that home prices increased the size of home equity for millions of people. Also, the decade-long run-up in the market may simply have been too hard to resist in a time when investments in safe fixed-income investments yielded as low as 1%.
Institutions once controlled stock market trading based on volume. Last year, retail investors returned to the market and substantially affected prices, particularly in so-called meme stocks, like AMC and GameStop, which posted huge fluctuations in their values. This made many individual investors large returns and crushed the returns of others.
Many investors have decided not to make their own investment decisions. They put money into large institutions that manage mutual funds, exchange-traded funds (ETFs) and other financial instruments. Some of these institutions control historically large sums of assets. Money manager BlackRock’s assets under management surpassed $10 trillion for the first time in the fourth quarter of 2021, the company said when it reported its financial results on January 14. The company reported $19.3 billion in revenue for the year and nearly $540 net inflows. BlackRock is the largest investment manager by assets under management.
Asset management companies help clients invest their money. Often, their clients include large institutional investors, such as pension funds, governments, corporations and endowments. Many also manage mutual funds and other vehicles individual investors can invest in. High net worth investors are also among these firms’ clients.
Whether asset managers can repeat their recent success in 2022 remains to be seen. With inflation roaring at a four-decade high and the Federal Reserve warning of different measures it plans to take, markets have been reeling.
Click here to see all the world’s biggest asset management firms in 2021.
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