BlackRock Still Leads US ETF Market, But It’s Losing Ground

The asset manager’s rival Vanguard has captured investors’ recent interest in embracing cheap broad-market index funds.

Photo of BlackRock logo on building
Photo by Eflon via CC BY 2.0

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When you’re king, everyone comes for your crown, except for on The Crown, where no one, it seems, could be bothered.

BlackRock, the world’s largest asset manager, has been ceding ground in the US exchange-traded fund market to Vanguard and other smaller rivals, the Financial Times reported on Tuesday. BlackRock may be younger, but Vanguard appears to be hungrier.

The Whole Package

ETFs are similar to mutual funds — instead of buying individual stocks, you’re putting money into a basket of securities. A tech ETF could include Apple, Nvidia, Meta, and a whole slew of other companies. But ETFs tend to be cheaper, can be continuously traded throughout the day, and are often passively managed. 

That ease of trading has helped build US-based ETFs into an $8 trillion industry. BlackRock still controls the largest piece of that pie, but its slice has shrunk over the past few years. As of November, iShares — BlackRock’s ETF division — managed about 32% of the US market, the FT reported. But it had roughly 40% of the market just five years ago — so why the dip?

  • Some of that market share has been snagged by Vanguard, the world’s second-largest asset manager which now controls 29% of the US ETF industry. Even new challengers like JPMorgan and Dimensional Fund Advisors, the latter of which didn’t even offer ETFs in 2018, now have a combined 3% of the market. 
  • Bryan Armour of Morningstar Direct told the FT it just comes down to investors’ recent preference for what Vanguard does best: “When iShares competes directly with Vanguard on cost, like S&P 500 or total stock market ETFs, investors still reach for Vanguard’s ETF because those cheap, broad-market index funds are what [Vanguard is] best known for. And cheap index funds have been on fire in terms of flows.”

Greener Grass Across the Pond: While BlackRock is losing territory in the US, its place in Europe has remained steady and gone mostly unchallenged over the same five-year period. Though the continent’s market is worth only $1.7 trillion, BlackRock has consistently managed 44% of it. As any fan of The Crown knows, kings take good care of one another in Europe.