Even as BlackRock is set to amass $1 trillion in exchange-traded fund assets in its iShares business, U.S. retail investors increasingly prefer to send their money to low-cost leader Vanguard Group, highlighting a weak spot for the world's biggest money manager.
With $998 billion in ETF money, BlackRock has more than the next contenders, Vanguard and State Street, combined. But the company has struggled to compete with Vanguard, known for its investor-friendly low-cost investing, for Mom and Pop's nest eggs. Retail investors now account for more than half of the $1.8 trillion in ETF assets under management in the U.S, according to consulting firm PwC.
So far this year, Vanguard has pulled in about $30.3 billion in net new ETF money in the U.S., or about 43 percent of the market, while iShares is second with $24.7 billion, or about 35 percent. That reflects a trend that's been going on for years: at the end of 2009, BlackRock had 47.7 percent of total U.S. ETF assets under management, compared with 11.7 percent for Vanguard. By the end of May, BlackRock's share was down to 38.9 percent, compared with 20.6 percent for Vanguard, according to Lipper, a unit of Thomson Reuters.