The asset management industry is increasingly shifting toward tailored portfolios, fund proliferation, and decentralization of stewardship – trends partly driven by growing heterogeneity in investor preferences. While these developments better align investment products with investor demands, they also reshape ownership structures, potentially leading to more fragmented ownership and weaker managerial oversight. We develop a framework to evaluate these trade-offs and show that fund proliferation does not necessarily weaken governance: Stronger incentives for asset managers and concentrated portfolios of specialized funds can offset these effects, especially when investor preferences are intense. However, strong investor preferences can also induce asset managers to compete on a new margin – granting investors control by decentralizing stewardship and adopting pass-through voting – without internalizing the associated governance costs.