Vanguard Trounces BlackRock for ETF Flows in Volatile First Half
Vanguard Group’s U.S. exchange-traded funds attracted inflows of about $89 billion in the first half, surging ahead of industry leader BlackRock Inc. in a volatile period.
BlackRock took in an estimated $38 billion, according to Bloomberg Intelligence data, as market swings fueled by the coronavirus crisis spurred selling from the types of active traders who favor the iShares lineup. Vanguard’s dominance contrasts with the first half of 2019, when BlackRock led its main rival by about $1.9 billion.
“Vanguard is more focused on these types of products which are designed to cater to long-term, buy-and-hold investors,” said Alex Bryan, director of passive strategies and research for North America at Morningstar Inc. Such customers “likely aren’t looking to make tactical adjustments based on what’s going on in the market,” he said.
The flows strike a blow for Vanguard in the increasingly fierce battle to dominate a more than $4 trillion market. BlackRock became the fund industry leader with its acquisition of the iShares lineup more than a decade ago, but Bloomberg Intelligence analysts estimate it could be overtaken in size by its chief competitor within 10 years -- or faster in an extended downturn.
BlackRock said market upheaval underscores the value of its lineup.
“When investors needed to rapidly reposition their equity portfolios in light of economic uncertainty and record volatility, they turned to iShares,” said Ed Sweeney, a spokesman for the New York-based firm. “The same is true when they needed liquidity and transparency in fixed-income markets. IShares’ ETFs repeatedly demonstrated their versatility and resilience this year.”
Terminal users can read about Vanguard’s race to catch BlackRock with Bloomberg Intelligence.
A “distribution bump” from the commission-free trading trend that took hold late last year also may be benefiting Vanguard, Bloomberg Intelligence analysts wrote last month. The index-investing pioneer, known for its low costs, tends to win whenever it gets on an even playing field, according to the report.