Vanguard had $325.5 billion in ETF assets as of Dec. 3, nearly $43 billion behind State Street Global Advisors for the second spot and barely more than half the ETF assets held by BlackRock’s (NYSE: BLK) iShares unit.
Still, Pennsylvania-based Vanguard, one of the leaders in providing low-cost access to mutual funds, has ascended to third spot among U.S. ETF issuers. The company’s reputation for low-cost leadership, which has included fee cuts on over a third of its 67-ETF lineup over the past year, is a primary reason the firm has been so proficient at gathering ETF assets. [Vanguard Cuts Fees on 22 ETFs]
This year, Vanguard is the leader when it comes to gathering assets. “Vanguard leads with $51 billion, or 32 cents out of every dollar invested in an ETF, up from 28 cents last year. It has seen 21 of its 67 ETFs grow by at least $1 billion in 2013,” reports Eric Balchunas for Bloomberg.
Investors like Vanguard ETFs, for among other reasons, low fees and number of holdings. For example, a “$10,000 investment gets you a deep bench of 84 securities per dollar with Vanguard, 10 times the eight securities per dollar you get with iShares and State Street,” according to Bloomberg.
Favorable costs does not mean Vanguard is immune from competition. Actually, the opposite is true. Vanguard had undercut State Street on fees for sector ETFs, but Fidelity introduced 10 sector ETFs in October all with fees of 0.12%, less than what Vanguard charges for funds like the Vanguard Health Care ETF (NYSE: VHT). [Fidelity Puts Vanguard on Notice]