Asset management is the professional management of investments on behalf of clients. The clients may be individuals, pension funds, endowments, or corporations. The asset manager decides what to buy, hold, and sell, aiming to meet the client's goals while managing risk. Fees are usually a percentage of assets under management.

The industry is huge. BlackRock, Vanguard, and State Street together manage over $20 trillion. They own significant stakes in most large public companies. That concentration of ownership gives asset managers influence over corporate governance, executive pay, and environmental policy. They vote the shares they hold on behalf of clients, and those votes matter.

Strategies vary. Passive management tracks an index, like the S&P 500, with low fees and little trading. Active management tries to beat the market through research and stock picking, charging higher fees. Most active managers underperform their benchmarks over long periods, which is why passive investing has grown so much. But active management still has a role in less efficient markets, like emerging markets or small-cap stocks.

Asset management is regulated. In the United States, the Securities and Exchange Commission oversees investment advisers. They must act as fiduciaries, putting clients' interests first. That standard is legally enforceable, and violations carry penalties.