The Specter of the Giant Three

32 Pages Posted: 10 May 2019 Last revised: 20 Mar 2020

See all articles by Lucian A. Bebchuk

Lucian A. Bebchuk

Harvard Law School; European Corporate Governance Institute (ECGI); National Bureau of Economic Research (NBER)

Scott Hirst

Boston University - School of Law; Harvard Law School Program on Corporate Governance

Multiple version iconThere are 2 versions of this paper

Date Written: May 9, 2019


This Article examines the large, steady, and continuing growth of the Big Three index fund managers — BlackRock, Vanguard, and State Street Global Advisors. We show that there is a real prospect that index funds will continue to grow, and that voting in most significant public companies will come to be dominated by the future “Giant Three.”

We begin by analyzing the drivers of the rise of the Big Three, including the structural factors that are leading to the heavy concentration of the index funds sector. We then provide empirical evidence about the past growth and current status of the Big Three, and their likely growth into the Giant Three. Among other things, we document that the Big Three have almost quadrupled their collective ownership stake in S&P 500 companies over the past two decades; that they have captured the overwhelming majority of the inflows into the asset management industry over the past decade; that each of them now manages 5% or more of the shares in a vast number of public companies; and that they collectively cast an average of about 25% of the votes at S&P 500 companies.

We then extrapolate from past trends to estimate the future growth of the Big Three. We estimate that the Big Three could well cast as much as 40% of the votes in S&P 500 companies within two decades. Policymakers and others must recognize — and must take seriously — the prospect of a Giant Three scenario. The plausibility of this scenario exacerbates concerns about the problems with index fund incentives that we identify and document in other work.

This paper is part of a larger project on the incentives of investment managers that also includes Index Funds and the Future of Corporate Governance: Theory, Evidence, and Policy and The Agency Costs of Institutional Investors (with Alma Cohen).

Keywords: index funds, passive investing, institutional investors, ETFs, Big Three, stewardship, engagement, shareholder activism, corporate voting, ownership concentration

JEL Classification: G23, G34, K22

Suggested Citation

Bebchuk, Lucian A. and Hirst, Scott, The Specter of the Giant Three (May 9, 2019). Boston University Law Review, Vol. 99, 2019, pp. 721-741, Harvard Law School John M. Olin Center Discussion Paper No. 1004, European Corporate Governance Institute (ECGI) - Finance Working Paper No. 608/2019, Available at SSRN: or

Lucian A. Bebchuk (Contact Author)

Harvard Law School ( email )

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United States
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European Corporate Governance Institute (ECGI) ( email )

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National Bureau of Economic Research (NBER) ( email )

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Scott Hirst

Boston University - School of Law ( email )

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United States

Harvard Law School Program on Corporate Governance ( email )

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Cambridge, MA 02138
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