“In the investment world I think there are going to be fewer” companies, McNabb said in an interview Thursday with Bloomberg TV. “You’ll see almost a bifurcated kind of world.
You’ll see some big global players, probably 10 or 15 dominant firms, but then you’ll see a lot of smaller players who will be more niche players.”
Vanguard, which oversees about $4.2 trillion, has, together with BlackRock Inc., emerged as the biggest winner from an investor flight to low-cost mutual funds and exchange-traded funds that track indexes. Active managers have been fighting back by seeking to cut costs through takeovers.
Consolidation will continue as companies seek “the benefits of scale in this global and technologically oriented economy,”
McNabb said. “It takes resources and scale to be global, so you are seeing much more attention paid to that.” The competition in the industry is not between active and passive management, but between low and high cost, and investors are choosing lower cost because it allows them to keep more of their money, McNabb said.
Source: Bloomberg
Trader Bozhidar Arabadzhiev
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