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October 18, 2010 at 08:54 AM
On the heels of the recent announcement that Vanguard Group is now the largest asset management company, the Valley Forge, Pa.-based company is shaking up the exchange-traded fund space, as well.
Bloomberg reports that BlackRock Inc. and State Street Corp., the world’s top sellers of exchange-traded funds, may be forced to cut fees as they lose assets to lower-priced competitor Vanguard Group Inc.
According to the news service, Vanguard’s U.S.-based ETFs pulled in $25.6 billion this year through Sept. 30, 26% more than BlackRock and State Street combined, according to Chicago-based Morningstar Inc. Vanguard last month offered nine new equity ETFs, taking on the bigger companies for the first time with funds that track Standard & Poor’s and Russell indexes, including the S&P 500 Index.
Assets in ETFs rose almost 14-fold in the past decade to $897 billion, Morningstar data show. Bloomberg notes State Street and BlackRock dropped to a 70% combined share from 85% in 2005, as investors flocked to lower-fee funds from Vanguard, Charles Schwab, and Pacific Investment Management Co.
