We’ve been talking about asset management—which we’ve classified as the management of corporate and institutional investments—and how its very structure has been changing, largely due to innovative and disruptive technology. The first article on this topic circumscribed the rise of asset management in the latter half of the last century and how it enjoyed a 40-year window of unparalleled growth, disrupted finally by economic upheaval and the upsurge in consumer demand, technology, and especially data.

How the free flow of information and data caused a leveling of the asset management market was laid out in the second article in this series. Where we left our discussion was pointing out that the industry has barbelled, with megalithic asset management firms and tiny boutique firms, which are doing well, squeezing those firms in the middle. We also discussed the shift from alpha to beta returns.

To continue our series, we will turn our attention to another major aspect of corporate and institutional investing: pension funds for company and institutional employees. Here too the industry has experienced massive shifts, from defined benefit pensions toward defined contribution pensions. While much has been written in protest against this change in the U.K., decrying companies that, “through their own greed, selfishness and regulatory incompetence have systematically raided workers’ employer’s defined benefit pension funds,” a similar trend has been playing out in the U.S. over the past 20 years.

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