The Vanguard Total Bond Market ETF became the largest U.S.-listed bond exchange-traded fund at the end of last week, edging past BlackRock's iShares Core U.S. Aggregate Bond ETF, which has long held that title.
The Vanguard fund had $83.71 billion in assets as of Aug. 5, compared with $83.707 billion for the BlackRock ETF, according to FactSet Research Systems data used by VettaFi, a data and analytics provider.
"We're seeing strong adoption of fixed-income ETFs by retail investors," said Todd Rosenbluth, head of research at VettaFi, adding that those investors are using the Vanguard ETF in particular as a building block for asset allocation.
Vanguard has a strong brand among retail investors stemming from its mutual fund offerings, Mr. Rosenbluth said.
"And, as retail investors adopt bond ETFs, Vanguard has benefited from that," he said.
Year to date through Aug. 5, the Vanguard fund has seen $7.7 billion of net inflows, according to VettaFi data, while the BlackRock fund saw $501 million of net outflows. The BlackRock fund was down 8.5% this year through Aug. 5, faring slightly better than the Vanguard fund, which was down 8.7%, according to VettaFi data.
“While we’re excited that so many investors are entrusting their assets in Vanguard Total Bond Market ETF, cash flows are not a goal for Vanguard,” Janel Jackson, Vanguard’s global head of ETF capital markets and index and broker relations, said in a statement. “Rather, the strong inflows we’ve seen from investors into BND and our ETFs broadly are simply a reflection of investors’ continued embrace of our approach to low-cost, broadly diversified, long-term investing.”
BlackRock's iShares remains the world's largest ETF provider, and BlackRock manages the most fixed-income ETF assets, Mr. Rosenbluth said, adding that the iShares Core U.S. Aggregate Bond ETF remains popular with institutions.
"AGG has historically had greater liquidity due to its strong trading volume, and AGG remains a go-to vehicle for institutional investors even though BND has slightly more assets under management," he said referring to the iShares Core U.S. Aggregate Bond ETF and the Vanguard Total Bond Market ETF by their respective ticker symbols.
Fixed-income ETFs have seen "enormous" growth since iShares introduced them 20 years ago and are now "fundamental to how investors of all types access and trade the fixed income markets," a BlackRock spokesman said in an email Tuesday.
"Despite the most challenging fixed-income environment in many decades, iShares is leading the industry in fixed-income ETF inflows with over $62 billion so far this year, more than twice the nearest competitor," the spokesman said. "We are proud of the industry's progress in modernizing the bond market for all investors, and we look forward to championing continued growth in fixed-income ETFs."