The two giants of the U.S. asset management industry, Vanguard and BlackRock continue to duke it out for market share in the increasingly crowded ETF space, as the former once again surpassed $2 trillion in assets under management, or AUM earlier this month.
Despite incursions by independent ETF start-ups aided by white-label services, expansions by boutique thematic providers, or even expansions from the asset management arms of bulge bracket banks, Vanguard and Blackrock (NYSE:BLK) continue to dominate the ETF industry.
The latter continues to lead the U.S. ETF industry at over $2 trillion in AUM spanning a total of 398 U.S. listed ETFs, ranging from index ETFs to specialty sector, industry, ESG, factor, and actively managed ETFs.
In contrast, Vanguard's lineup is smaller, with just 81 ETFs, the majority of which focus on low-cost, broad-market index exposure with a smattering of sector, factor, and fixed income funds.
Here's a high-level view of where the two titans stack up in the contemporary ETF landscape in terms of some notable ETFs each has to offer.
Vanguard vs. BlackRock: Flagship Equity Funds
According to the ETF Central Screener, the top equity ETFs in Vanguard and BlackRock's lineup are the Vanguard Total Stock Market ETF (VTI) and the iShares Core S&P 500 ETF (IVV) respectively.
VTI is the ETF share class of Vanguard's existing total stock market mutual fund VTSAX. Investors who subscribe to Vanguard and John Bogle's passive indexing philosophy have poured a collective $271 billion into this fund thanks to its ability to deliver low-cost, broadly diversified U.S. market exposure.
On the other hand, IVV has the leg up in terms of AUM and inception date, currently sitting at $293 billion and having been around since May 2000. The ETF tracks none other than the S&P 500 index and has swelled thanks to its rock-bottom expense ratio of 0.03%.
While traders may still prefer the 30-year-old SPDR S&P 500 ETF (SPY (NYSE:SPY)) for its high liquidity and options chain, long-term investors continue to flock to IVV thanks to its low fee. With SPY charging a 0.09% expense ratio, IVV offers a competitive alternative at a third of that price.
Another bonus: Because IVV and VTI track different indexes, yet have a higher degree of overlapping holdings and very similar historical returns, investors can use them as tax-loss harvesting pairs.
Vanguard vs BlackRock: Flagship Fixed Income Funds
The two providers also duke it out on the fixed income side too, with a variety of passive and active funds spanning aggregate, corporate, municipal, mortgage-backed, TIPS, and Treasury bonds. Both Blackrock and Vanguard offer ETFs that provide exposure to varying maturities. However, the former's bond ETF lineup is larger with more exotic offerings like floating-rate, senior loan, and high-yield.
That being said, the flagship bond ETFs of both providers share a common thread: Both the Vanguard Total Bond Market ETF (BND) and the iShares Core U.S. Aggregate Bond ETF (AGG) track the same broad swathe of U.S. Treasury, agency, and investment-grade corporate bonds at a low cost.
Because both ETFs are benchmarked to the Bloomberg U.S. Aggregate Bond Index, their portfolio characteristics are similar: an average duration of around 6.3 years, an average yield-to-maturity of around 4.5%, and identical expense ratios of 0.03%. Both ETFs hold the majority of their portfolio in Treasury and government agency bonds, with the rest comprising investment-grade corporate bonds.
As such, both ETFs tend to be used as "goldilocks" bond holdings by retail investors trying to implement a passive indexing strategy – they're "just right" in terms of credit quality, duration, and yield for the average portfolio. For those requiring specialty exposure, like access to longer-duration Treasurys, TIPS, or short-term corporate bonds, both Vanguard and BlackRock have options to augment BND and AGG.
All data as of 10 March 2023.
This content was originally published by our partners at ETF Central.