BlackRock’s iShares has been a stalwart goliath in the ETF universe, but the ongoing scrutiny over investment costs has helped Vanguard Group’s ETF suite to slowly catch up.
Vanguard has attracted $112 billion in net inflows over the first half of the year, compared to BlackRock’s $77 billion in new inflows, the Financial Times reports. Vanguard added another $23 billion in July, whereas BlackRock experienced outflows form its retail products.
According to XTF data, BlackRock’s ETFs currently hold $1.4 trillion in assets under management, compared to Vanguard’s $929.1 billion in ETF assets. However, the gap is closing, and one analysis predicts Vanguard could overtake the ETF asset leader by 2021.
These ETF behemoths have exhibited an increasingly competitive nature in recent years, leaving many smaller providers in the dust and affecting the wider investment industry, especially as the ongoing so-called fee war drives down costs across the investment board.
“I don’t think they’re doing anything very different,” Daniel Wiener, editor of the Independent Adviser for Vanguard Investors, told the Financial Times. “It’s just that the low-cost train has picked up steam. More investors are aware of the benefits of low cost and Vanguard has the reputation as the leader in that regard.”
Vanguard Vs Blackrock’s iShares
Specifically, Vanguard has 77 U.S.-listed ETFs with an average expense ratio of 0.11%, according to XTF data. In comparison, BlackRock’s iShares has 343 listed ETFs with an average 0.35% expense ratio.
“We are grateful that investors continue to entrust their assets to Vanguard’s low-cost ETFs, but we don’t view this as an asset-gathering horse race. Cash flow is never a goal at Vanguard. We remain focused on delivering value for our clients — if they are successful, then we will be successful,” Vanguard told the Financial Times.
After experiencing a breakneck speed of asset growth, the ETF industry has slowed down in 2018 in response diminished demand for risk on heightened market volatility, concerns over global trade barriers and rising interest rates.
“Despite an industry-wide slowdown in flows associated with investor uncertainty in the current market environment, our dialogue with clients and opportunities to provide long-term solutions are more robust than ever before,” according to BlackRock.
For more information on the ETF industry, visit our ETF performance reports category.