• Mon. Sep 25th, 2023

Definition and Top Money Managers by Assets

What Is Money Management?

Money management refers to the processes of budgeting, saving, investing, spending, or otherwise overseeing the capital usage of an individual or group. The term can also refer more narrowly to investment management and portfolio management.

The predominant use of the phrase in financial markets is that of an investment professional making investment decisions for large pools of funds, such as mutual funds or pension plans.

Key Takeaways

  • Money management broadly refers to the processes utilized to record and administer an individual’s, household’s, or organization’s finances.
  • The term also refers more narrowly to investment and portfolio management.
  • Financial advisors and personal finance platforms such as mobile apps are increasingly common in helping individuals manage their money better.
  • Poor money management can lead to cycles of debt and financial strain.
  • The biggest money managers by assets under management are BlackRock, Vanguard, and Fidelity.

Understanding Money Management

Money management is a broad term that involves and incorporates services and solutions across the entire investment industry.

Consumers have access to a wide range of resources and applications that allow them to individually manage nearly every aspect of their personal finances. As investors increase their net worth, they also often seek the services of financial advisors for professional money management. Financial advisors are typically associated with private banking and brokerage services, offering support for holistic money management plans that can involve estate planning, retirement, and more.

In the growing financial technology market, personal finance apps exist to help consumers with nearly every aspect of their finances.

Investment company money management is also a central aspect of the investment industry. Investment company money management offers individual consumers investment fund options that encompass all investable asset classes in the financial market.

Investment company money managers also support the capital management of institutional clients, with investment solutions for institutional retirement plans, endowments, foundations, and more.

Top Money Managers by Assets

Global investment managers offer retail and institutional investment management funds and services that encompass every investment asset class in the industry. Two of the most popular types of funds include actively managed funds and passively managed funds. Passively managed funds replicate specified indexes, they usually charge low management fees.

The list below shows the top global money managers by assets under management (AUM):

BlackRock Inc.

In 1988, BlackRock Inc. was launched as a $1 division of the BlackRock Group. By the end of 1993, it boasted $17 billion in AUM, and, by 2022, that number swelled to a whopping $8.6 trillion. BlackRock’s exchange-traded fund (ETF) division, called iShares, has about $2.5 trillion in AUM globally, amounting to roughly 29% of the group’s total assets. Overall, the firm employs approximately 13,000 professionals and maintains offices in more than 30 countries around the world.

The Vanguard Group

The Vanguard Group is one of the most well-known investment management companies, catering to over 30 million clients across 170 countries. Vanguard was founded by John C. Bogle in 1975, in Valley Forge, Pennsylvania, as a division of Wellington Management Company, where Bogle was previously chair. Since its launch, Vanguard has grown its total assets to beyond $8 trillion, becoming the world’s second-largest asset manager thanks to the popularity of its low-cost investment funds.

Fidelity Investments

Fidelity Management & Research Company was founded in 1946 by Edward C. Johnson II. As of Dec. 31, 2022, Fidelity had more than 40 million customers with $10.3 trillion in total assets and $3.9 trillion in AUM. The firm offers hundreds of mutual funds, including domestic equity, foreign equity, sector-specific, fixed-income, index, money market, and asset allocation funds.

What is the difference between a money manager and asset manager?

As implied in their respective names, money managers manage money and asset managers manage assets. However, as assets essentially represent money, the two can largely be considered the same thing.

What are the main principles of money management?

The main principles of money management are generally income, investing, savings, and spending. With the right balance, these principles can help individuals to maximize their financial well-being.

What is the goal of money management?

The ultimate goal of money management is to maximize wealth.

The Bottom Line

Money management is precisely that: The management of money. When people talk about money management, they may be referring to how an individual or company handles their finances, whether that be budgeting, saving, investing, or spending. Alternatively, they could be referring to the companies many people count on to manage their capital.

In financial markets, the term money management is generally synonymous with big investment firms, or asset managers, taking people’s money and investing it. The biggest money managers in the world are BlackRock, Vanguard, and Fidelity. Between them, they oversee many of the largest, most well-known mutual funds and pension plans.

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