Our readers have been wondering about the M&A activity they’ve witnessed recently. They want to know why it’s happening and what it means for the industry.

First, I should note that firms acquiring and merging with other firms is a theme we’ve witnessed for more than 40 years — certainly since 1979, when I first entered the business. Being small means being nimble. But investors have grown dramatically in sophistication in the past 44 years, while the size of the portfolios they manage has ballooned — in many cases into the billions of U.S. dollars.

What hasn’t scaled for most investors is the size of their investment staff. So, while their knowledge and skill have grown tremendously, the resources available to manage their blossoming portfolios have not kept pace. This means investors have had little choice but to reduce their investment manager relationships. In addition, investors have long attempted to better align their interests with their investm