$10 tn AUM is way too much. I don’t see what the price of their stock has to do with anything.

Agreed. Investing with one of the huge investment firms such as BlackRock, Vanguard or State Street feels like investing in the erosion of democracy and the monopolization of the means of production.

The optimal strategy for them is to coerce all the companies that they invest in to only do business with each other in order to completely lock new competitors out of the market. This is very bad for consumers and society.

Vanguard literally provides for investment in every security. All of them. Every single one. I currently own interest in every equity security available to a US investor by purchasing a single ETF. How is it that Vanguard (which is owned by its funds which in turn are owned by individual investors in those funds) would benefit from coercing literally every publicly traded company from transacting with every other non-publicly business? For instance, of what benefit is it to Vanguard to prevent Sysco from selling food to restaurants that are not publicly traded? Should Apple not sell phones and laptops to any non-publicly traded business? Should Amazon stop transacting with non-publicly traded companies? How does any of that work in my interest as an owner of Vanguard?

The shenanigans are thought to be around M&A and alternatives. A company like Vanguard can use market power to juice its more profitable products by depressing prices.

> $10 tn AUM is way too much

Please elaborate. What's the right amount?

$10 trillion AUM and a market cap of $100 billion means that 99% of their investments are directly on behalf of their clients, that's what GP is emphasizing.

AUM: "Assets Under Management".

Why does that matter? Why is 10T too much? It's a big number but that money is ultimately under the control of the individual asset holders (so far as I understand it anyways).

Agree on all points except the comparison with banks. The banks do technically own the money you put in it - and what you get in return is an IOU. So a bank is a very different sort of thing.

I think that's an overly semantic argument. I can be as certain as I am of anything that the number in my RBC chequing account corresponds exactly to the amount of money I can withdraw or spend, and if that ever stops being the case I'll likely have bigger concerns than money.

Might be an American thing, we only have FDIC insurance up to a certain limit and the the difference of what happens in a bankruptcy is mechanically very different between a broker and a bank. Historically this has also been different for the stakeholders too, which is why people were not certain the number would actually result in them being able to withdraw funds from Silicon Valley Bank. Though recently they’ve de-facto increased the FDIC insurance limit by making sure whatever bank bought the distressed bank would accept the liability for the deposits over that.

I think it is an American vs Canadian thing. The list of ten largest banks in North America is nearly evenly split between American and Canadian banks[0], so the five main Canadian banks are 10x as large as their American counterparts, proportional to the population.

The only conceivable scenario where a major Canadian bank fails and any depositors are not made whole is one where the government has lost the ability to maintain the currency and the Canadian dollar is worthless anyway.

[0] https://en.wikipedia.org/wiki/List_of_largest_banks_in_North...

But this matters in the context of parent comment because different things happen to money that you deposit in a bank compared money you have invested in, say, a mutual fund/ETF (which most of Blackrocks funds are) after they reinvest (even if both invest in the same loan!).

The mutual fund would use the cash to buy stocks or loans and you would be entitled to a share of that profit or loss (both upside and downside), but the mutual fund manager would typically only be paid an annual fee (1).

Money deposited in a bank gives you no upside, and, as you say, a tiny downside risk. (even before deposit insurance) Those taking the downside risk (as well as the upside) is mainly bank equity investors.

(1) As another commenter correctly pointed out there are also other sort of funds that look a bit more like banks for various reasons, but that also doesn't necessarily mean the fund manager is the one taking the upside/downside risk.

There are plenty of (particularly debt/bond) investment funds structured this way too ie you buy an IOU from them (for varying reasons from tax to regulation to legal costs) - "securitization vehicles", CLOs, etc.

<The fact that Blackrock did this deal doesn't tell you anything about who is exposed to the upside or downside

Can you explain this part more? Does blackrock not invest its own money in deals? And are specific deals specific to blackrock customers or do they just take a percent of their overall holdings and invest them in individual deals?

Most of the money "invested" in this deal belongs to institutions and individuals who have chosen to invest in BlackRock products. A trivial example is if your pension is with BlackRock, they are investing on your behalf and they get a very minor fee for it (minor in terms of percentage, not value). So while the headline is that BlackRock invested in ABC, the actual exposure to the profits or losses is for the people whose money they have invested. The amount of money BlackRock might invest of their own is usually negligible ( sometimes called coinvesting or balance sheet investing, not common for larger firms like fidelity or BlackRock).

What the exact flow is will depend ultimately on how the fund is structured. For example, Goldman will run a private equity focussed fund that you can put money in as a customer, so if you did put money in it, they would invest in similar deals on your behalf. Other customers of Goldman may or may not choose to invest in that fund, preferring something like a bond fund or equities fund etc.

Blackrock is an asset manager. You can go to ishares.com, search for an ETF, buy shares of it and Blackrock will have your money investing it on your behalf.

It will take away a small percentage of your money every year to pay costs and make its profits, but you will profit from the returns of the investment itself.