Vanguard Group Inc. on Jan. 20 surpassed State Street Global Advisors as the second-largest exchange-traded fund provider, a new milestone following a year that was filled with them.
According to ETF.com, a data and analytic website, Vanguard had $432.65 billion in ETF assets at the close of business last Tuesday, giving it a 21.8% market share. SSgA had $431.8 billion, for a 21.7% share.
BlackRock Inc., New York, still dominates the market with $756.42 billion, or a 38.1% share.
Overall, Vanguard's global assets under management hit $3.1 trillion as of Dec. 31, according to data from the money manager. That includes $214.5 billion in net inflows for 2014 — a record for the money management industry and an increase of 56% for Vanguard from 2013.
“Vanguard is doing ridiculously well, and why not? They offer competitively low prices, and as they've become bigger, they've lowered prices,” said Michael S. Falk, a consultant to money managers and a partner with Focus Consulting Group in Chicago.
The vast majority of those assets — $200 billion — went into index funds, which is, of course, what Vanguard, based in Malvern, Pa., is known for around the world.
Vanguard had $2.15 trillion in worldwide indexed assets as of Dec. 31. BlackRock reported $2.84 trillion, and SSgA, $1.946 billion.
Several factors — such as some popular active stock managers underperforming, increased fee sensitivity among asset owners and the current low-return environment — have accelerated institutional investors' growing appetite for passive strategies.