over 3 years ago • 2 mins
Activist investors’ schtick is buying a sizable stake in a company and using it to influence the company’s strategy 👉 Except activist Trian Fund Management has gone one step further: it’s bought 9.9% stakes in two firms – Invesco and Janus Henderson – and is trying to get both of them to do its bidding.
Invesco and Janus Henderson are already products of mergers and acquisitions, but Trian now wants them to join forces. The reason’s pretty straightforward: the more money an investment manager looks after, the more profitable it should be 💰 That’s because more money brings in more fees, even as the investment manager’s costs – like analysts and technology – stay put. That extra profit, Trian hopes, should boost the combined company’s value and make it a fiercer rival to the world’s biggest investment manager, BlackRock.
Investors have increasingly been pulling their cash out of pricey and underperforming “active” funds in favor of low-cost “passive” funds that don’t require much tinkering. That’s come as a blow to investment managers’ earnings, and driven plenty of them to cut fees in a bid to win investors back ✂️ Adding insult to injury, this year’s record low interest rates have forced some funds to abandon fees altogether so their bond investors can earn any sort of a return.
A world with fewer investment managers would be good for their profits, since it’d relieve some of the pressure to win your business with lower fees 🌎 But that’s not the fragmented and competitive world we live in, so you can reap the rewards instead. Keep your eyes peeled for low-fee introductory deals: those savings, with compounding, will eventually add up to something much, much bigger.
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