Fund champs go head to head
There’s little to choose between the world’s two heavyweight institutional fund managers as they square up to fight for profitability. BGI and SSgA both have commendable records and both are now testing out new strategies.
UNTIL RECENT CHANGES of strategy, Barclays Global Investors and State Street Global Advisers seem to have followed a similar path. The world’s largest institutional fund managers, they have both built up about $1.4 trillion in assets under management, predominantly through their passive quantitative businesses. “It’s nearly impossible to say which one you would choose when they go head to head in a pitch for business for passive mandates,” says a consultant who prefers to remain anonymous. “They’re 10-ton gorillas that joust at the top.” Indeed, the power and size of BGI and SSgA is well illustrated by the refusal of any external consultant, not just this one, to comment on them on the record.
However, despite the similarities between BGI and SSgA, group decisions this year at both firms to reorganize senior management indicate that there are far greater differences in culture between the two than outsiders have generally identified. BGI has been aggressively building up its active and hedge fund business with an attitude more in keeping with investment banks. SSgA has taken a steadier and broader approach, with less focus on active management and more on geographical expansion.