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 $4 trillion in investment assets, an amount so immense that it is roughly equal to the gross national products 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:  commercial banking, investment banking, asset management, insurance, mortgages, financial advisory, venture capital, mergers and acquisitions and more.

2016 was a modest year in terms of companies going public for the first time, with about 100 companies raising an estimated $16 billion in initial public offerings of stock (IPOs) on U.S. exchanges, according to analysts at Renaissance Capital.  Globally, only $79.4 billion was raised in IPOs on the world’s stock exchanges through the third quarter of 2016.

Mergers and acquisitions, a major segment of the investment industry, saw a 22% drop in global M&A volume for the first nine months of 2016 compared to the same period in 2015, reaching $2.55 trillion, according to Dealogic.  U.S. volume for the period fell 38% to $771.3 billion.  Top negotiations included Bayer’s $66.3 billion takeover of Monsanto and the $46.7 billion proposed acquisition of Syngenta by China National Chemical Corp. (the largest cross-border transaction by a Chinese company to date).

Meanwhile, large numbers of bond offerings were completed during the year, 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.  Global, regulated open-end funds assets totaled $39.3 trillion on June 30, 2016, according to the Investment Company Institute, up from $38.3 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 $67.2 trillion as of June 30, 2016 (up from $60.0 trillion one year earlier), with shares available in 49,012 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 by 2014-2015, the industry generally enjoyed robust business, with strong volume and high stock market values.  At the same time, governments, particularly in the EU and North America, began a relentless campaign of stricter regulation of virtually all facets of the industry.

The U.S. Investment Industry:  Employment in firms that are involved in securities and investments was estimated at 931,300 as of October 2016 in America alone, up from 903,800 the previous year, according to numbers published by the U.S. Bureau of Labor Statistics.  About 52 million Americans participate in 401(k) investment plans at their places of work as of 2016, according to Investment Company Institute, with assets totaling about $4.9 trillion as of mid-2016.  Mutual funds in America held $16.1 trillion in assets as of October 2016, according to the Investment Company Institute.  U.S. retirement and pension account assets totaled about $24.5 trillion in mid-2016.