Mallika Mitra
2 min read
In This Article:
Vanguard is just one or two years away from taking BlackRock’s title as the king of exchange-traded funds, according to Eric Balchunas, senior ETF analyst at Bloomberg.
In a note published Thursday, Balchunas said that while Vanguard holds the second-highest spot in ETFs with $3.2 trillion in assets, it only trails the world’s largest asset manager by $146 billion.
Vanguard is currently leading with $131 billion in new flows for the year compared to BlackRock’s $61 billion, setting it on pace to overcome BlackRock in about a year, Balchunas wrote.
That’s a significantly faster takeover than what industry experts predicted even just a few weeks ago. In April, Allan Roth, an etf.com contributor and founder of financial planning and investment advisory firm Wealth Logic, estimated that it would take Vanguard at least a decade to overtake BlackRock.
“At Vanguard, it’s not the size of our haystack but what our 50 million investors are getting from the haystack,” Rodney Comegys, global head of Vanguard's Equity Index Group, shared with etf.com in an emailed statement. “We appreciate this sentiment, but our priority is helping our clients achieve their investment goals rather than on which firm manages the most ETF assets.”
BlackRock pointed etf.com to its emailed statement from a BlackRock spokesperson in the aforementioned story: “The quality, breadth and innovation of our ETF platform—from core allocation tools to active ETFs to digital assets ETFs—puts us in a unique position to best meet changing client demand through various market cycles.”
While Vanguard may lead the way in nearly every fund category and be well on its way to closing the gap between itself and BlackRock in the ETF space, it still has a ways to go when it comes to active funds. The fund provider is currently No. 3 with just 8% of assets, putting it far behind Capital Group and Fidelity, Balchunas wrote. He added that the firm will likely have to launch active equity ETFs in addition to its recent actively managed bond strategies, and back these launches with marketing efforts, to catch up to its competitors.
That it's behind in active assets is not surprising, given the vision Vanguard was founded on. Founder John Bogle was a proponent of low-cost passive investing and expressed criticism of active investing.
Still, Bogle’s dreams for the industry haven’t exactly come to fruition.
“Founder John Bogle told employees in 1991 that Vanguard's mission wouldn't be complete until its share began to erode, since that would indicate that the rest of the industry had gotten cheap enough to re-establish the trust needed to attract investors,” Balchunas wrote. “That won't happen soon.”
