(Bloomberg) — Vanguard Group has ushered in a new world order in fixed income exchange-traded funds.
The Vanguard Total Bond Market ETF (ticker BND), with approximately $83.8 billion in assets, surpassed the $83.2 billion iShares Core US Aggregate Bond ETF (AGG) to become the largest bond ETF in the world. world, according to data from Bloomberg.
Larry Fink’s BlackRock Inc. has long been the largest issuer in the $6.6 trillion ETF arena, but Vanguard has tightened its grip on the industry. Armed with ultra-low fees, the giant founded by John Bogle, which is now the second-largest US issuer of ETFs, has increased its market share of industry assets for 20 consecutive years. This has significantly narrowed the gap between Vanguard’s $1.86 trillion in US ETF assets under management and BlackRock’s $2.2 trillion ETF.
“A down market is Vanguard’s Briar Patch. This is when their products climb the categories the fastest, because asset growth can only come from flows and BND is an inflow machine,” said Eric Balchunas, senior ETF analyst at Bloomberg. Intelligence. “It’s also the result of the great cost migration that Vanguard ushered in.”
The reversal comes despite attempts by BlackRock to attract investors to its bond funds. The asset manager cut fees on AGG to 0.03% from 0.04% in April to match BND’s expense ratio. It also cut costs at two other fixed-income ETFs in January, countering similar moves by State Street Corp. and Vanguard.
“Fixed income ETFs have seen tremendous growth since iShares introduced them 20 years ago and are now essential to how investors of all types access and trade the fixed income markets,” wrote a door. -word from BlackRock in an email. “Despite the toughest bond environment in many decades, iShares is the industry leader in bond ETF flows with over $62 billion so far this year, more than double the closest competitor. “
But Vanguard’s dominance extends to rankings. While BlackRock still has the largest number of fixed income ETF assets under management, four of the top five funds are Vanguard products.
AGG saw its assets plummet after starting the year at over $92 billion, but BND remained about the same size amid a turbulent market. Although the two ETFs are posting comparable returns, investors have invested about $8.2 billion in BND and withdrawn nearly $100 million from AGG this year, according to Bloomberg data.