Being a sucker for regional economics history and how certain niches develop over time, especially in finance (venture capital in SF/Silicon Valley, IB in NYC, derivatives in Chicago, insurance and metals in London, reinsurance in Bermuda, etc.), I'm curious if anyone here knows why Boston has been a hub for asset management for so long, relative to other cities (other than NYC which is a hub for basically everything now), though this probably has decreased overtime since everyone has a highspeed internet connection but still. Would really appreciate if anyone happens to know the history of that.
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thought it might have been CoL and proximity to NY but I just looked and its not as close as I thought it was
It’s critical mass from early movers that became titans in AM. Early companies like Fidelity, State Street, Columbia Threadneedle, Loomis Sayles, Putnam, Wellington, and Eaton Vance paved the way for names like Cambridge Associates and Geode. It’s been an asset management titan since the industry matured in the early 20th century, and the reputations of major figures like Peter Lynch have kept it going.
This is sort of what I was thinking, thanks for responding. I was randomly reading about Pembroke Real Estate, which is owned by the Johnson family which owns Fidelity and then started thinking about it.
At the end of the day, all of these things can get really tilted with just a few people. Think Fairchild Semiconductor. The right people were around when Investment Companies became a thing in the US, and Boston took advantage.
I would add presence of consultants like NEPC and Cambridge Associates.
and actual consultants, notably BCG and Bain
Most of these aren't power players anymore. Big ones there now are Fidelity & Wellington, the rest are not even 2nd tier generally
Don't forget about MFS, the founder of the fund business.
Would the concentration of top tier academic institutions have anything to do with it? A bunch of high performers from those schools decided to stick around and set up shop?
yeah I was just trying to see if there was anything else. NYC doesn't have as many but is intrinsically more important in general. Boston is also huge in biotech for that reason, and was formerly very big in tech (route 128 especially in '60-80s) before that shifted to the Bay Area (techcrunch article about it).
Oh yeah I’m doing research at my university and literally a HUGE distribution of all biotech companies that IPO’d were usually SF/Bay Area or Boston/Cambridge
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