As of Dec. 31, Vanguard's worldwide AUM totaled $4.94 trillion, about 78.5% of BlackRock's $6.29 trillion, according to data provided by the two managers for Pensions & Investments' annual money manager survey. As of Dec. 31, 2009, Vanguard's $1.509 trillion was just 45% of BlackRock's total of $3.346 trillion.
Based on Vanguard's 15.98% and BlackRock's 8.2% compound annual growth rates in the eight years ended Dec. 31, Vanguard — if those growth rates remain consistent — would surpass BlackRock by the end of 2021. The worldwide AUM as of Dec. 31, 2021, would be $8.94 trillion for Vanguard and $8.62 trillion for BlackRock, as calculated by P&I. At that same rate, Vanguard would exceed $20 trillion by the end of 2027, P&I calculates.
In terms of worldwide institutional assets and U.S. tax-exempt institutional assets, Vanguard's growth in AUM has been equally significant. In the eight years ended Dec. 31, Vanguard's worldwide institutional AUM had a 17.9% compound annual growth rate, to $3.1 trillion from $830 billion, and U.S. institutional tax-exempt AUM had a 17.4% compound annual growth rate, to $1.37 trillion from $380 billion. Those rates outpaced BlackRock's 5.9% and 7.3% in worldwide and U.S. institutional tax-exempt assets, respectively, during that same time period.
Vanguard's impressive growth, even in a bull market that has lasted nearly a decade, has been attributed to the industry's shift toward passive assets, and Vanguard's reputation for low fees. Whether the rapid growth in assets under management can continue at this rate is up for debate.
"I think there's no secret that passive has certainly led to the growth," said Brad Long, principal, research director – global public markets, at DiMeo Schneider & Associates LLC, Chicago, in a telephone interview. "I think a repeat performance is unlikely, but that doesn't mean Vanguard won't continue to have success. As you look across all assets, the preponderance of assets are still allocated actively, so who knows where the settling point is in that dialogue?"
"Many others, obviously BlackRock, State Street (Global Advisors) and Northern Trust and many other asset managers are making material moves into that space, so I think the competition there is rising," Mr. Long said. "The other thing that I'd say provides additional competitiveness is not all of Vanguard's assets, but much of their assets, live in 40-Act mutual funds or ETFs. The market for collective investment trusts, especially in the DC market, has become more competitive and a much more prevalent way to access that market."
Martin Schmidt, principal at MAS Advisors, Chicago, said in a telephone interview that Vanguard's growth should continue to be strong because "the market continues to go toward passive." He added that plan executives and individuals have been extremely conscious of fees and that should continue.
Mr. Schmidt said he believes Vanguard eventually will surpass BlackRock in AUM.
"It's not a question of if. It's a question of when and how that will happen," he said.