Vanguard Lags BlackRock in ETF Sales

December 19, 2017 — 2:50 PM EST

Vanguard and BlackRock, Inc. (BLK) are the kings of passive investing, but when it comes to exchange-traded funds (ETFs), BlackRock has a leg up on its rival.

Through November, BlackRock's iShares ETFs have seen $198.4 billion of net new ETF assets. Meanwhile, Vanguard was in second place, with Morningstar saying that the firm has net new ETF assets of $127.7 billion through November, reported Investment News. Third-place Charles Schwab had net new ETF assets of $24.3 billion through November. while State Street was in fourth place with $15.5 billion in net new ETF assets.

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According to Investment News, BlackRock's iShares Core S&P 500 ETF (IVV) was a top seller so far this year with net inflows of around $30 billion. That compares with the Vanguard S&P 500 ETF (VOO), which had $13.2 billion in net inflows. Both funds track the Standard & Poor's 500 Index and have the same expense ratio of 0.04%. While the two ETFs are very similar, the difference between their inflows is quite large. David Nadig, chief executive of ETF.com, told Investment News that it could be due to the marketing might of BlackRock and iShares. "There's no question that BlackRock built a brand that resonates with the early adopter investor. iShares is probably the only real ETF brand," Nadig said in the interview.

After seeing their retirement accounts and stock investment portfolios get wiped out in the Great Recession of 2008 and 2009, scores of investors moved to more passive investments such as index funds and ETFs. That has been a boon for BlackRock and Vanguard, the leaders of passive investing – so much so that Bloomberg predicts that the firms could become even bigger, managing as much as $20 trillion combined in under a decade.

Based on its own calculations, Bloomberg predicts that Vanguard will see its assets under management total grow to $10 trillion by 2023. Meanwhile, BlackRock, which currently has around $6 trillion in assets under management, will hit the $10 trillion mark by 2025. Bloomberg based its forecast on the most recent five-year average annual growth in assets at both firms. However, the financial media company cautioned that the gains are due in part to a long-running bull market in stocks that has increased the amount of assets under management. The asset managers may not continue to grow at the same rate if the equity markets pull back next year or in the years to come.