How the ground is shifting in the ETF industry

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ETFs growing, still smaller than mutual funds

As more retail investors make the move from mutual to exchange-traded funds, one company appears to be reaping the biggest share of the benefits.

In a year that has been sluggish otherwise for the $1.76 trillion ETF industry, Vanguard has seen its assets under management grow substantially, putting it in position to rise from third to second in the overall ranking of fund families, according to ETF.com.

In fact, the firm—founded by investing legend and index fund advocate Jack Bogle—has seen individual ETFs it owns occupy three of the top four spots and five of the top seven in terms of inflows. Vanguard led all providers through the first four months with $18.6 billion in new money.

Industry experts attribute its success to a variety of factors, but at the center is retail investor acceptance of ETFs as a vehicle after generations of putting money into more expensive mutual funds. The two differ in that, along with lower fees, ETFs are more liquid and trade in much the same way as stocks.