Clash of the titans

“THE marked increase in the popular participation in securities transactions has definitely placed under the control of financiers the wealth of the nation.” Thus concluded the US Senate’s report into the causes of the stock market crash of 1929.

The world is again in an age of truly powerful financiers. Some giants of today simply reflect the size of America’s economy. JPMorgan Chase, the largest bank, is big because America is. But others owe their heft to how the structure of markets has changed.

Index-based funds and other forms of passive investing in public markets have risen inexorably. That has been to the advantage of BlackRock and Vanguard, the asset managers which dominate low-cost investment products.