And Don't Forget Perspective

May 23, 2007

There have been a lot of rumblings this week & YTD about the Vanguard launches. Lets not forget that iShares still has more in one fund (EFA at $45 billion) than Vanguard has in ETF assets altogether ($30 billion).

And all the indications I get is that no one has told BGI that they've hit a plateau. They continue to hire like there's no tomorrow, snapping up personalities from around the industry almost weekly, it seems. And they're not resting on their laurels in terms of innovation, either. The iNotes, just could maybe revolutionize the entire exchange-traded product industry. I'm watching that, and the potential tax rulings very closely.

And maybe it's just me, but BGI really has a way of jabbing, float-like-a-butterfly-sting-like-a-bee style at the competition. Maybe it's just a coincidence, but the Sue Thompson hiring (from Vanguard and after Noel Archard had already shockingling come over) was announced, as far as I could tell, about 3 weeks after Sue had actually made the move, on the same day as the Vanguard bond launch.

And the day after the big EAFE announcement from Vanguard, this morning I get an email from BGI announcing an "iShares Breakfast Seminar" with Burton Malkiel presenting. Now that probably IS a coincidence (in terms of timing, though who knows). But it is kind of funny you've got to grant, since there's no one who's been more closely associated with Vanguard for so long than Burton.


Anyway - I think it's all great news for us - the investors - because we're now seeing some souped-up competition in the part of the market where you didn't think there was much space to move down on fees. Indexes are getting better, and fees are getting even lower as the industry continues to build scale.

Billions of dollars are flowing regularly into parts of the industry now. Here's the big picture product issuer breakdown in case you've missed it:

ETF Product Issuer Assets


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