Investment & Asset Management Industry Market Research

The investment industry is comprised of a wide variety of sectors and service providers.  At the top of the list are the giant asset managers, like BlackRock, a firm managing $6 trillion in investment assets, an amount so immense that it is more than the Gross Domestic Product (GDP) of Russia and India combined.  Also at the top of the industry are the biggest exchanges, where billions of shares trade hands yearly, along with the major investment banks, those firms that raise money for corporate clients by selling their stocks and bonds to the public.  Investment banks also deal in private equity investments and asset management, and they earn immense fees by brokering mergers and acquisitions.

Then there are the big firms that provide stock brokerage services.  Some of them, like Merrill Lynch, are also investment banks.  Others, like Charles Schwab, are primarily stock brokers that deal with millions of individual customers.

However, the lines have blurred between sectors in recent years.  It is common for one firm to operate in multiple segments of the investment industry at once, including some or all of such sectors as commercial banking, investment banking, asset management, insurance, mortgages, financial advisory, venture capital, mergers and acquisitions and more.

2018 was an active year in terms of companies going public for the first time, with about 190 companies raising an estimated $46.8 billion in initial public offerings of stock (IPOs) on U.S. exchanges, according to analysts at Renaissance Capital. Globally, $145.1 billion was raised in IPOs on the world’s stock exchanges through the third quarter of 2018.

Mergers and acquisitions (M&A), a major segment of the investment industry, saw a 7% increase in global M&A volume during 2018 compared to 2017, reaching $4.0 trillion, according to the Institute for Mergers, Acquisitions and Alliances (IMAA).  U.S. volume for the period increased by 9% to $1.9 trillion.    

Meanwhile, large numbers of bond offerings were completed during 2017, taking advantage of extremely low interest rates.

The Global Investment Industry:  This is a massive, global industry, and in light of the fact that it provides the services that enable companies to have access to capital, it is one of the most important industries of all.  Worldwide, regulated open-end investment funds assets totaled $49.39 trillion on June 30, 2018, according to the Investment Company Institute, up from $44.78 trillion one year earlier.  The World Federation of Exchanges estimated the total value (market capitalization) of stocks on all of the world’s significant exchanges at $85.9 trillion as of June 30, 2018 (up from $78.2 trillion one year earlier), with shares available in 50,158 companies.

After an extremely turbulent environment during the recent recession (late 2007 through mid-2009), the global investment industry has been greatly altered.  Many of the best-known brands in the industry failed or were taken over.  Lehman Brothers was allowed to fail completely.  Bear Stearns was taken over by JPMorgan Chase at a nominal price.  Global banking and investment industry leader RBS (Royal Bank of Scotland) was bailed out with public funds to the extent that it became controlled by the UK government.  Insurance industry giant AIG was bailed out by the American government.  The world became familiar with phrases like “toxic assets,” and American taxpayers, whether they liked it or not, backed emergency plans and market support programs with acronyms like TARP (Troubled Asset Relief Program) and TALF (Term Asset-Backed Loan Facility).  By the end of 2009, the U.S. government had created initiatives based on corporate bailouts, asset purchases, emergency lending and financial market support totaling more than $2 trillion.  These were only a few of the massive changes wrought by the upheaval of the global financial crisis that began quietly in the late summer of 2007 and roared into a full financial hurricane in 2008.

By the end of the painful 2008-09 period, the investment industry, on a global basis, had been through losses, layoffs, scandals, bankruptcies, forced mergers, government intervention, bailouts and/or disappointments on a scale not seen in decades.  In 2010 through 2014, the investment industry began rebuilding and reshaping its strategy, and thereafter the industry has generally enjoyed robust business, in recent years.  Meanwhile, governments worldwide enacted a relentless campaign of stricter regulation of virtually all facets of the investment and banking industries.

The U.S. Investment Industry:  Employment in firms that are involved in securities and investments was estimated at 970,900 as of October 2018 in America alone, up from 950,600 the previous year, according to numbers published by the U.S. Bureau of Labor Statistics.  About 55 million Americans participate in 401(k) investment plans at their places of work as of 2018, according to Investment Company Institute, with assets totaling about $5.3 trillion as of mid-2018.  Mutual funds in America held $18.4 trillion in assets as of October 2018, according to the Investment Company Institute.  U.S. retirement and pension account assets totaled about $28.3 trillion in mid-2018.

It is interesting to note that the number of public companies in the U.S. has been falling steadily since the late 1990s.  There were 7,322 American companies listed on U.S. stock exchanges in 1996.  As of late 2017, there were only 3,671. Increased venture capital and private equity capital has led to fewer IPOs.  Another factor is increased regulation, shareholder lawsuits and demands from lobbyists and activists that create a difficult climate for publicly-held companies.  New issuance of stocks has also declined dramatically.  The number of IPOs in the U.S. fell from 845 in 1996 to 275 in 2014, and approximately 190 in 2018.