Vanguard will pass rival State Street Global Advisors to become the second-largest ETF manager by assets after BlackRock’s iShares, according to the results of a survey published Thursday by Ignites.com.
“More than 84%, or 266 respondents, foresee Vanguard pushing SSgA out of its spot as the second-largest ETF provider in the next five years,” Ignites reports.
At the end of March, assets in SSgA’s U.S.-listed ETFs totaled $298.8 billion, while Vanguard controlled $204.8 billion, according to data from the ETF Industry Association. BlackRock is the top dog with $500.4 billion.
Vanguard’s market share of the U.S. ETF market has grown from 6% at the end of February 2007 to 17% at the end of this February, according to the Ignites report. [Vanguard ETF Assets rise Above $200 Billion]
Vanguard has seen assets in its U.S. exchange traded funds top the $200 billion mark after grabbing nearly a third of inflows the past two years.
Vanguard was relatively late to the ETF business in 2001 and chief executive Bill McNabb said the company’s entry was based on a shift in the U.S. advisor market to a fee-based from commission-based model.
“That was when we began to realize that ETFs could be phenomenally helpful fundamental holdings for advisers as they started to build low-cost, highly diversified portfolios for their clients,” McNabb said in a recent Financial Times article.
ETFs represented 45.2% of Vanguard’s net inflows in 2011. McNabb said ETFs would become “a global phenomenon” as more countries moved away from commission-based sales.
Vanguard is getting a boost from interest in international and emerging market ETFs, and low expense ratios, Ignites reported Thursday.
“That coupled with Vanguard’s brand name and the resources they are putting into reaching out to advisors all adds up to a growing ETF franchise,” Todd Rosenbluth, ETF analyst at S&P Capital IQ, said in the article.