Vanguard's VOO Helps Chip Away at BlackRock's US ETF Lead

With $3.1 trillion in assets across 468 ETFs, BlackRock Inc’s (BLK) iShares sits atop the $10 trillion U.S. exchange-traded fund market.

How comfortably it holds that top spot is another matter.  

New York-based BlackRock’s lead as the biggest U.S. ETF issuer is being slowly chipped away by No. 2 Vanguard. The $165 billion gulf separating the firms has narrowed from $177 billion at this time last year, and Vanguard is pulling in assets at a slightly faster rate.

Vanguard Eyes No. 1 Spot

Vanguard, with $2.9 trillion in assets across 91 exchange-traded funds, has widened its share as the ETF market has grown—U.S. ETF assets have jumped 13% to $10 trillion from $8.9 trillion a year ago.

A narrowing gap in an expanding market puts the momentum with Vanguard, and experts say the company, which celebrates 50 years in business May 1, will one day grab the top spot.

“I do think Vanguard will surpass BlackRock in ETF AUM,” said Allan Roth, an etf.com contributor and founder of financial planning and investment advisory firm Wealth Logic. Roth estimated that surpassing BlackRock will take at least a decade and that Vanguard is being helped by investors like himself transferring mutual fund investments into easier-to-manage ETFs.

Malvern, Pennsylvania-based Vanguard kicked off the year with an unprecedented haul of inflows. Through April 22, the John Bogle-founded company has pulled in $120.5 billion, double BlackRock’s $60.3 billion. Last year, Vanguard’s $304.4 billion net inflows edged out BlackRock’s $292.1 billion.

VOO vs. IVV

At the top of those inflows are the $573.6 billion Vanguard S&P 500 ETF (VOO), which this year overtook the SPDR S&P 500 ETF Trust (SPY) to become the world’s largest ETF. Over one year through April 23, it’s brought in a monstrous $136 billion, more than the total AUM of all but the eight biggest ETFs. BlackRock’s biggest fund, the $522.8 billion iShares Core S&P 500 ETF (IVV), has lately moved between being the second- and third-largest ETF and has brought in a not-too-shabby $86.4 billion.

“We're more focused on helping our clients achieve their investment goals than which firm manages the most assets,” Global Head of Vanguard's Equity Index Group Rodney Comegys said in an emailed comment. He also added that the firm is “gratified that investors continue to entrust their assets with Vanguard.”

Vanguard is being helped by its recent push into bond ETFs, Bloomberg Intelligence ETF Analyst Athanasios Psarofagis said in an email. Vanguard holds more equity ETF assets than BlackRock and is aiming to gain market share in fixed income, he said.  

“BlackRock knows this, which is why they have been so aggressive in things like Bitcoin and alternatives ... This is an area Vanguard is unlikely to go, so they will keep trying to push these areas,” Psarofagis said.

Both companies have widened their share of the market over the past year so that BlackRock holds 31% to Vanguard’s 30%, with each picking up about a percentage point of share. Vanguard’s overall AUM increased by $436 billion versus BlackRock’s $414 billion increase.

Big 3 U.S. ETF Issuers—Source: etf.com league tables data as of April 23

BlackRock Maintains Its Lead For Now

Worldwide, BlackRock remains the biggest ETF issuer by a wide margin, holding $4.3 trillion in more than 1,500 funds. It hauled in $107 billion in inflows so far this year and $390 billion last year. Vanguard, globally, holds $3.2 trillion in 260 ETFs.

“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,” a BlackRock spokesperson said in an emailed statement. 

etf.com Senior Content Editor Kent Thune contributed to this article.