Help us improve in just 2 minutes—share your thoughts in our reader survey.
Asset management company
| Environmental, social, and corporate governance |
|---|
|
| • What is ESG? • Enacted ESG legislation • Arguments for and against ESG • Opposition to ESG • Federal ESG rules • ESG legislation tracker • Economy and Society: Ballotpedia's weekly ESG newsletter |
An asset management company (AMC) is a firm that invests and manages funds on behalf of clients. Most AMCs operate as fiduciaries—meaning that they are legally required to make investment decisions in the best interest of their clients. AMCs may also be responsible for proxy voting on behalf of shareholder clients.[1]
In the context of public policy, states often hire AMCs to manage their public pension investments, raising questions related to whether AMCs should be allowed to consider environmental, social, and corporate governance (ESG) criteria in their management of public money.
Background
Asset management companies typically manage hedge funds for individuals with high net worths, pension funds for governments, and other products like mutual funds that allow lower-net-worth individuals to pool money in a managed portfolio. Capital pools can help keep costs (like management and transaction fees) down for investors. They can also allow for greater diversification, which can reduce investment risks. AMCs commonly invest managed funds in assets like stocks, bonds, and real estate.[2]
AMCs typically charge a monthly or annual fee for management services, which is usually calculated as a percentage of assets under management. For example, an AMC might charge a 1% annual management fee for investors in a fund, meaning the company would charge an investor $1,000 per year to manage $100,000 of assets.[2]
AMCs and environmental, social, and corporate governance (ESG)
Public pension management and the question of whether states should allow AMCs to consider ESG criteria when investing public money is an important topic related to ESG investing and public policy.
Opponents of ESG investing argue that it reduces investment diversification (which increases portfolio risk), harms financial performance, and contrasts with an investment approach that focuses on the likely maximization of financial returns to the investor. To learn more about the opposition to ESG investing, click here.[3][4][5]
Supporters of ESG investing argue that in the long run, ESG investing will lead to acceptable financial returns. ESG advocates also say that ESG and profit are not mutually exclusive and argue that corporations can and should improve communities and the environment through the adoption of ESG philosophies and approaches.[6][7]
Noteworthy Events
Trump signs executive order allowing alternative investments in 401(k) plans
President Donald Trump (R) signed an executive order on August 7, 2025, allowing 401(k) retirement plans to include alternative investments such as private equity, real estate, and cryptocurrency. The order directs the Department of Labor, the Securities and Exchange Commission (SEC), and the U.S. Department of the Treasury to update regulations to facilitate these investment options, marking a significant shift in retirement plan rules. Supporters argue the change expands investment choice, while critics warn of risks related to liquidity, fees, and oversight.[8]
See also
- Net Zero Asset Managers Initiative
- Sustainability
- Materiality
- Arguments about environmental, social, and corporate governance (ESG)
- Opposition to environmental, social, and corporate governance (ESG) investing
External links
Footnotes
- ↑ Investopedia, "Fiduciary Definition: Examples and Why They Are Important," September 15, 2022
- ↑ 2.0 2.1 Investopedia, "Asset Management Company (AMC)," accessed March 10, 2023
- ↑ NPR, "How ESG investing got tangled up in America's culture wars", September 12, 2022
- ↑ Wall Street Journal, "ESG and the ‘Long-Run Interests’ Dodge", September 29, 2022
- ↑ Wall Street Journal, "An ESG Champion Stumbles: The California Public Employees’ Retirement System posts a decade of lackluster returns.", September 22, 2022
- ↑ CNBC, "Lauren Taylor Wolfe says it’s just too risky for investors to ignore ESG amid recent pushback", September 23, 2022
- ↑ CNBC, "There’s an ESG backlash inside the executive ranks at top corporations", September 29, 2022
- ↑ Washington Post, "Trump signs order to open alternative assets to retirement savers", accessed August 8, 2025
| |||||||||||||||||||||||
