Are BlackRock and Vanguard Too Big and Powerful?
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 8 June 2022
⏱️ 27 minutes
🔗️ Recording | iTunes | RSS
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Summary
How big index fund and ETF providers have increased their sway over publicly-traded companies while potentially discouraging competition. What can be done about it?
Topics covered include:
- How market share for assets under management has become increasingly concentrated with big fund complexes like Vanguard and BlackRock
- What is a fiduciary relationship and how do asset managers serve as fiduciaries
- Why do investors in index funds and ETFs have no input as to how fund sponsors vote on shareholder proposals
- What percentage of outstanding shares do Vanguard and BlackRock own of publicly traded companies like Apple, Target, or gun manufacturers
- How Vanguard and BlackRock use engagement and voting policies to influence publicly traded companies, particularly when it comes to climate risk and diversity
- How ownership by Vanguard and BlackRock in publicly-traded companies in the same industry could discourage competition.
- What can be done through regulation or through individual action to reduce Vanguard and BlackRock's influence
For more information on this episode click here.
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Show Notes
World's Top Asset Management Firms—ADV Rating
The Future of Corporate Governance Part I: The Problem of Twelve by John C. Coates, IV
Larry Fink’s 2022 Letter to CEOs: The Power of Capitalism
BlackRock's gun money by Dan Primack—Axios
Investment Stewardship 2021 Annual Report—Vanguard
Proxy Voting Policy for U.S. Portfolio Companies
Anticompetitive Effects of Common Ownership by José Azar, Martin C. Schmalz, and Isabel Tecu
Related Episodes
148: Is Your Financial Advisor Loyal to You?
340: Climate Change, ESG, and What Should Investors Do?
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Transcript
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| 0:00.0 | Welcome to Money for the Rest of Us. |
| 0:03.1 | This is a personal financial show on money. |
| 0:06.0 | How it works, how to invest it, and how to live without worrying about it. |
| 0:09.9 | I'm your host, David Stein, today's episode 390. |
| 0:13.3 | It's titled, Are BlackRock and Vanguard Too Big and Powerful? |
| 0:17.9 | I recently received an email from a longtime listener. |
| 0:21.4 | She is in her 80s. |
| 0:23.6 | She mentioned that her individual retirement account, all of her grandchildren's college |
| 0:29.3 | 529 plans, and most of the rest of her net worth is managed by Vanguard. |
| 0:36.1 | She finds Vanguard easy to work with. |
| 0:39.1 | They've provided helpful tax management strategies. |
| 0:42.8 | But she sent me an article that concerned her. |
| 0:45.7 | It was an editorial in The New York Times by Far Had Manju. |
| 0:50.3 | It was titled, What BlackRock, Vanguard, and State Street are doing to the economy? |
| 0:56.1 | She suggests these three asset management firms control too much of the economy. |
| 1:01.4 | How can that be? |
| 1:02.4 | Aren't they just investing in stocks on behalf of their clients, most of which are in index |
| 1:07.4 | funds? |
| 1:08.4 | Yes, of course. |
| 1:09.4 | But the amount that they manage in assets keeps growing. |
| 1:14.0 | The most recent ICI Factbook had an interesting chart. |
| 1:18.9 | It showed in 2005 the five largest fund complexes, which would include Vanguard and BlackRock, |
... |
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