Vanguard and other smaller competitors are gaining ground on BlackRock in the US trade exchanged fund market as companies compete for a bigger share of the $8 trillion market. As of November, approximately 32% of the US ETF market was managed by BlackRock’s iShares.
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That was lower by over seven percent from the last quarter of 2018, since the $9.1 trillion asset manager held nearly two each of each five dollars spent in US ETFs, as compared to 33.7% in late 2022, based on data from Morning Star Direct.
Vanguard’s ETF suite “takes a different take” by concentrating only on stocks and bonds and utilising the group’s credibility for low-cost, broad-based techniques, according to Bryan Armour, Morningstar’s head of passively research for North America.
BlackRock’s iShares
In contrast, BlackRock’s iShares lineup aims to “be everything to everyone.” Investors continue to choose Vanguard’s ETF despite iShares’ direct cost competition, such as S&P 500 or total market value ETFs, since Vanguard is best known for its affordable, broad-market index funds.
Additionally, the flows into index funds that are inexpensive have been booming,” he stated. In contrast to BlackRock’s success in Europe, the biggest investment firm in the world has seen its market share erode in the US.
There, the company’s ETF lineup has consistently held a 44% share of the market of the $1.7 trillion over the previous five years, significantly outperforming its rivals.
When asked about the market share movements, BlackRock cited its $220 billion in global inflows in the year 2022 and stated that it was expected to maintain its position as the leader in global flows in 2023.
“We take great pride in the fact that our clients worldwide, ranging from novice investors to prominent active asset managers, continue to place more of their freshly acquired assets in iShares than any other company to fulfil their investment requirements, be it for core allocation tools or liquidity instruments,” a BlackRock representative stated.
BlackRock has expanded on its early-advantage in Europe-domiciled exchange-traded funds (ETFs) by forming a network of connections with European institutions, according to Debbie Fuhr, the founder of the consulting firm ETFGI.
BlackRock prevalence
Additionally, she noted that the US has a far higher prevalence of retail investing than Europe, during which institutional clients familiar with BlackRock have more clout. “They take a global-local approach to their approach.” Since 2018, Vanguard’s market share in the US has grown from roughly 25% to roughly 29%.
According to a spokeswoman, the company would “keep up a careful approach to product growth to expand on an ETF lineup that has gained clients’ trust.
“According to Morningstar, the share price of State Street Global Advisors has fallen from nearly 17 percent in 2018 to just under 15 percent as of December 2023, trailing only iShares as well as Vanguard in the US ETF market. Meanwhile, Invesco has gradually increased from 5 percent to nearly 6 percent.
In recent years, JPMorgan along with Dimensional Fund Advisors—two less well-known players—have aggressively expanded their ETF lineups to gain combined control over 3% of the US market. This is in contrast to less than 1% in 2018, while DFA failed to provide a single ETF.
Both companies have converted mutual funds that already exist into exchange-traded funds (ETFs), allowing funds to expand their asset bases rather than beginning from scratch.
By the end of 2018, the European an ETF market was valued at approximately $765 billion, but it has now grown to over $1.7 trillion.
In accordance with data from ETFGI, in addition to iShares, Amundi (currently at 12.7%) and DWS’s Xtrackers (10.1%) control sizable portions of the market, with The Vanguard controlling roughly 6.6%. According to Fuhr, “competition to reach clients is very high in the US and is growing in Europe.”
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