“If Vanguard has the same ETFs that are identical in makeup to iShares and two-third of the cost, it is my fiduciary responsibility to my clients to switch,” a financial advisor told Reuters.
“Many people underestimated the long-term value of the brand and the experience of Vanguard,” added Lee Kranefuss, industry consultant and former iShares chairman, in the story.
Vanguard is the third-largest ETF provider by assets but is gaining on rivals iShares and State Street Global Advisors.
At the end of June, assets in U.S.-listed iShares ETFs totaled $482.3 billion, according to ETF Industry Association data. State Street controlled $290.7 billion and Vanguard held $208.3 billion.
Together, the so-called ETF Big Three control a market share of 83.4%, according to Morningstar. [Energy, REITs Lead Inflows to Sector ETFs]
“ETFs are not commodities,” a BlackRock spokesman told Reuters. “Buyers care a lot about liquidity, brand, product quality and accuracy of exposure.”
So far in 2012 through the end of June, Vanguard ETFs have attracted net cash inflows of $29.6 billion, according to the ETF Industry Association, while iShares has gathered $16.2 billion and State Street has collected $10.3 billion.