Pennsylvania-based Vanguard, the third-largest U.S. ETF issuer, was the 2013 leader in terms of 2013 assets gained with $55 billion. The firm had $330.7 billion in ETF assets as of Jan. 2, $60 billion behind State Street’s (NYSE: STT) State Street Global Advisors and just over half the $655.6 billion in ETF assets held by BlackRock’s (NYSE: BLK) iShares.

Vanguard’s reputation for low fees is helping the firm bolster its ETF AUM total. Part of Vanguard’s “cost advantage stems from Vanguard’s focus on broad market-cap-weighted index products, which tend to have lower expenses than actively managed or niche index funds.

“Vanguard’s scale also helps because it can spread fixed costs over a larger asset base than its competitors and pass the savings on to investors. Its at-cost pricing strategy gives it an additional edge. Vanguard is structured as a mutually owned organization, so an owner of one of Vanguard’s funds is also an owner of Vanguard itself. As a result, Vanguard has an incentive to keep costs low. This business model works well in an industry where costs and performance are inversely related,” according to Morningstar analyst Michael Rawson.

Vanguard has pared fees on over a third of its 67-ETF lineup over the past year. [Vanguard Keeps Hauling in ETF Assets]