Giving investors low-cost, efficient market access has turned BlackRock Inc. and Vanguard Group Inc. into the world's largest asset managers. Vanguard, which pioneered the low-cost index mutual funds, has stuck with the tried and true with virtually all of its $5.8 trillion in pooled funds. BlackRock has built a more diversified book of assets elevated in part by its 2009 acquisition of Barclays Global Investors and its iShares brand of exchange-traded funds.
The big dogs: The two firms collectively manage more than a quarter of the combined assets of the 50 largest investment managers, with much of that growth happening in the past five years.
Go your own way: About 96% of Vanguard's AUM is held in mutual funds, while the bulk of BlackRock's assets are in collective investment trusts or separate accounts. The iShares business makes up about 30% of BlackRock's $7.4 trillion in AUM.
Low fees: The managers' mostly passive fund offerings charge fees below industry averages at a time when most active funds have difficulty topping their benchmarks.
What's next? Recent organic growth** has been in decline or volatile for the duo, with Vanguard reverting toward the mean as higher rates of growth become difficult with higher AUM.
Note: Percentages may not add to 100% due to rounding. *Defined as outperforming benchmark over 10-year period ended Dec. 31. **Defined as periodic flows divided by beginning assets. Sources: eVestment LLC, Bloomberg LP, Morningstar Inc.