Common Ownership Has Not Yet Ushered in an Era of Anticompetitive Behavior

As mutual funds have become popular with individual investors, the institutions that manage these funds have grown dramatically.  Along with the benefit of offering individual investors inexpensive portfolio diversification and engagement in corporate governance, there is mounting concern that the growth of institutional investors has an attendant cost.  The specific concern is that, as institutional investors increasingly own shares in most firms within each industry, such “common ownership” will lead the firms within these industries to compete less aggressively in product markets.  Stated simply, the fear is that large institutional investors are burgeoning monopolists and increased common ownership is ushering … Read more