Vanguard has squeaked past Fidelity to become the nation's biggest manager of long-term mutual fund assets.
Only $3 billion in non-money market fund assets separate the two powerhouses, according to data from Financial Research Corp., Boston. FRC compiles monthly mutual fund asset reports.
Fidelity Investments, Boston, had reigned since 1991, when it knocked Franklin Resources Inc. out of first place, said Kristin Adamonis, an FRC analyst.
According to FRC, Vanguard Group Inc., Valley Forge, Pa., had $472 billion in mutual fund assets, excluding money markets, through Aug. 31, the most recent period for which statistics are available. Fidelity had $469 billion.
The changing of the guard actually took place as of July 31, said Ms. Adamonis, when Vanguard forged ahead with $466 billion, compared with Fidelity's $463 billion.
Other mutual fund asset tracking firms, including Lipper Inc., Denver, and Kanon Bloch Carre, Boston, also show Vanguard displacing Fidelity. But statistics from the Investment Company Institute, a Washington mutual fund trade group - as well as Vanguard and Fidelity themselves - show Fidelity still is ahead of Vanguard. The FRC numbers, however, do not include variable annuity assets in mutual funds and generally are considered a leading source of pure mutual fund complex assets.
ICI ranks Fidelity on top with $497 billion through Aug. 31, followed by Vanguard, with $457 billion. (The ICI includes mutual fund assets in variable annuities, said Tara Meadow, ICI spokeswoman.)
Meanwhile, Fidelity reports $457.1 billion in long-term mutual fund assets as of Sept. 30, while Vanguard reports $432.7 billion.
Not a "horse race"
Spokeswomen for the two giant firms said it's not important which firm ranks first.
"Vanguard is not in an asset growth horse race," said Rebecca Cohen, Vanguard spokeswoman. "We measure our success by how well we are serving our shareholders, not by our asset ranking."
Fidelity spokeswoman Anne Crowley downplayed the rankings as well, saying asset gathering has never been the primary goal of Fidelity. "If that had been our objective, we would have gone into index funds in a significant way," said Ms. Crowley. She points out, however, that when money market assets are included, Fidelity is more than $100 billion larger than Vanguard.
Jeff Kiel, vice president at Lipper, said even though Vanguard and Fidelity officials won't admit it publicly, holding the top spot is important to these two very competitive firms.
When it comes to long-term mutual fund assets, Vanguard's larger bond presence has been key, said Scott Cooley, analyst at Morningstar Inc., Chicago. "It's a lot easier to sell bond funds than it is to sell stock funds right now," he said.
Slow and steady
Vanguard's climb to the top has been slow and steady since the stock market went south in March 2000. Through Dec. 31, 1999, Fidelity had $650 billion in long-term mutual fund assets while Vanguard was second with $481 billion, according to FRC. Since then, Fidelity's assets have declined 27%; Vanguard's, only 2%.
Ms. Adamonis said that Vanguard's low-fee approach and its passive management style are better suited to surviving the current market. Vanguard also has been buoyed by its larger fixed- income exposure, said William Dougherty, president of KBC. Vanguard has $137 billion in fixed-income assets and Fidelity, about $53 billion, said Mr. Dougherty.
Fund flows have been consistently higher at Vanguard since the market downturn in March 2000, said Lipper's Mr. Kiel. On a cumulative basis, Vanguard has gathered $71 billion in net flows since the bull market ended while Fidelity has amassed $45 billion. On a quarter-by-quarter basis, Vanguard had higher flows in every quarter but two since March 2000, according to Lipper.
