Money Management

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.

Understanding Money Management

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

In the market, 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 personal 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, which replicate specified indexes with low management fees.

The list below shows the top 5 global money managers by assets under management (AUM) as of Q1 2021:

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 2020, that number swelled to a whopping $8.68 trillion. BlackRock's exchange traded fund (ETF) division, called iShares, has more than $2 trillion in AUM globally, amounting to roughly a quarter 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 $7 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. 2020, Fidelity had more than 35 million customers with $9.8 trillion in total assets and $4.9 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.

Global asset management firm Pacific Investment Management Company LLC (PIMCO) was co-founded in 1971, in Newport Beach, California, by bond king Bill Gross. Since its inception, PIMCO has grown its AUM to $2.21 trillion. The firm houses over 775 investment professionals, each averaging 14 years of investment experience. With over 100 funds under its banner, PIMCO is widely regarded as a leader in the fixed income sector.

Invesco Ltd.

Invesco Ltd. has been offering investment management services since the 1940s. In February of 2021, the firm announced that it had $1.35 trillion in AUM, across its 100-plus mutual fund products. Invesco also offers over 100 ETFs through its Invesco Capital Management LLC division.