Vanguard Dethrones BlackRock as America’s ‘Definitive King’ of ETFs

The ETF leaderboard has a new numero uno. 

Vanguard is now the largest US exchange-traded fund issuer, surpassing BlackRock and ending the Larry Fink-run company’s more than two-decade reign. Vanguard manages around $4.39 trillion across 116 US-listed funds, according to data from Bloomberg, beating the $4.36 trillion managed by BlackRock. Founder Jack Bogle’s bet that investors want buy-and-hold investments at a low cost has paid off. After introducing the world to index funds in the ‘70s, he laid the groundwork for cheap funds, which his predecessors mimicked. In February, the firm shaved the expense ratios of 53 passively managed funds, which it estimated would save customers $250 million this year alone. Earlier this month, the Vanguard S&P 500 ETF (VOO) became the first ETF to hit $1 trillion in assets. 

“Vanguard’s low-complexity, low-fee approach has been slowly winning the ETF race for the last decade,” said Dave Nadig, president and director of research at ETF.com. “They’re slow to launch new products, quick to lower fees and that’s landed with a whole range of retail and advisor clients.” 

Slow and Steady  

ETFs have surged in popularity of late and newer innovations such as leveraged single-stock and crypto funds have garnered significant attention. But Vanguard has quietly kept doing what it does so well, Nadig said: run beta at the lowest possible marginal cost. 

“At Vanguard, asset growth reflects the enduring trust investors place in our time-tested, disciplined approach,” a Vanguard spokesperson said in an emailed statement. “Over the past 25 years, we’ve crafted a thoughtful selection of low-cost, broadly diversified ETFs across a range of asset classes to help investors pursue their goals with greater confidence.” 

But don’t feel too bad for BlackRock since it’se still on top globally:

• iShares, BlackRock’s ETF arm, manages roughly $6 trillion in ETFs around the world, over $1 trillion more than Vanguard, according to data through the end of May from ETFGI. 
• “iShares is an all-weather platform built to deliver for clients in every market environment,” a BlackRock spokesperson told ETF Upside. “We are focused on innovating alongside our clients to meet their evolving investment needs.” 

Still, it’s hard to imagine another firm challenging Vanguard’s title of “definitive King of America” in both ETFs and mutual funds, given that it brings in roughly 50% more flows than anyone else, Bloomberg analyst Eric Balchunas said via LinkedIn. 

Budget-friendly: Cost isn’t everything, Nadig said, pointing to “free” ETFs with waivers, upstarts like Corgi Funds trying to out-Vanguard Vanguard and large firms like Charles Schwab cutting fees of their own. “But there is something to the Vanguard brand, and no fee cut takes that away.”