Vanguard closes in on BlackRock’s ETF lead

One of the most heated rivalries in the investment sector is getting worse and worse. According to my colleagues Brooke Masters and Chris Flood, Vanguard is catching up to BlackRock’s lead in the $6.6 trillion US exchange-traded fund market, a key arena of competition for the world’s two largest asset managers.

BlackRock used its 2009 acquisition of the iShares ETF business from Barclays, dubbed the “deal of the century” in the asset management sector, to establish a dominant position at the top of the quickly growing ETF market.

But in recent years, Vanguard has been quickly catching up. Particularly in the US, its ETF division has attracted about $656 billion in new money since the beginning of 2020, outpacing the growth of BlackRock’s iShares ETF division, which has brought in about $411 billion during the same time period.

In the ongoing price war over ETF fees, both managers have traded blows, but when it comes to courting investors, they have taken very different tacks.

Vanguard’s strategy has centred on providing a small selection of products as building blocks for portfolios and leveraging its reputation as the least expensive provider to directly target retail investors and financial advisors.

BlackRock, on the other hand, caters to large institutional investors and provides a much wider selection of ETFs.