Vanguard Cuts Into iShares’ ETF Lead as Inflows Climb

Vanguard Group is chipping away at BlackRock Inc.’s lead as the world’s biggest ETF issuer, as the No. 2 firm’s inflows surge this year despite leadership changes and complaints that its technology and offerings are outdated.

BlackRock’s $145.7 billion lead over Vanguard in the U.S. has dipped 44%, or $113 billion, from $258.9 billion one year ago, according to etf.com data. This is partially a result of Vanguard’s exchange-traded funds pulling in $122.2 billion this year, almost double the $62 billion generated by BlackRock’s iShares.

Vanguard’s encroachment on iShares can be seen in the growth of the firms’ biggest funds: The $477 billion Vanguard 500 Index Fund (VOO) has pulled in $51.9 billion this year, while the $454.9 billion iShares Core S&P 500 ETF (IVV) has added $2.39 billion.

VOO Flows YTD

IVV Flows YTD

The race at the top of the league tables has tightened despite the year not going perfectly for Malvern, Penn.-based Vanguard. The company was widely criticized for not participating earlier this year in the debuts of spot bitcoin ETFs, which have accumulated billions in assets. When CEO Tim Buckley announced his retirement in March, questions were raised about the quality of the company’s technology and customer service.

Vanaguard's Bogle Legacy

Vanguard is pulling in fresh investor money thanks to an uncomplicated product line and sticking with founder John Bogle’s ideas around projecting a commitment to advisors and clients, ETFGI Managing Partner and founder Deborah Fuhr said.

“Vanguard has been consistent, that low-cost firm run for the benefit of investors,” said London-based Fuhr, a member of the etf.com editorial advisory board. “They stuck to their knitting.”

To be sure, New York-based BlackRock's iShares remains a juggernaut, with $2.79 trillion in 417 funds (globally, it manages $3.84 trillion in 1,147 ETFs for a 30% market share, according to ETFGI data). Vanguard holds $2.65 trillion in 86 ETFs in the U.S. (it’s a smaller player globally than iShares, with $2.84 trillion in 185 funds, Fuhr’s firm said).

BlackRock may also be helping in Vanguard’s future success. In March Vanguard named former BlackRock executive Salim Ramji as its next CEO. Ramji, considered a “Boglehead” by some observers, was instrumental in BlackRock's launch of the iShares Bitcoin ETF (IBIT) and his appointment was widely praised.

"Strong cash flows are simply an affirmation of the value we deliver for investors and the trust they place in us," a Vanguard spokesperson said in an emailed statement. BlackRock declined to comment.