As for the very public persona of Laurence D. “Larry” Fink, BlackRock’s chairman and CEO, as of late he has been opining on ESG and other issues, Mr. Warren said “Larry is more of a lightning rod. He’s being more vocal about issues like ESG and other issues in an effort to be transparent.”
Retail assets under management was one area where BlackRock has had higher growth in the year; it was up 22.4% for the year ended Dec. 31 and increased 132.5% for the five-year period compared with Vanguard’s 10.3% increase for the year and growth of 67.4% over five years, P&I survey data showed.
Despite slower growth rates than its main competitor, industry sources said BlackRock likely will remain the industry’s powerhouse.
“BlackRock is one of the industry’s very durable investment franchises and is differentiated from other money managers because of the advantages that Aladdin, its risk-management system, provides for internal use as well as by clients and other external users,” said Catherine A. Seifert, vice president and equity analyst, CFRA Inc., New York, in an interview.
Another advantage is the revenue Aladdin generates, an asset that Vanguard doesn’t have, Ms. Seifert said.
But Ms. Seifert warned that “BlackRock is at some risk because it doesn’t have a large alternative investment capability, an area that’s in high demand especially from institutional investors” and speculated that at “some point, it would not be surprising to see BlackRock make a significant acquisition to broaden its alternative investment offerings.”
In contrast to what BlackRock’s Mr. Buchwald said about investor preferences in 2021, investors still are very interested in investing in passive strategies, said Jeffrey DeMaso, New York-based director of research for Adviser Investments LLC, in an interview.
“The recent surge in assets at Vanguard is the result of the shift from active managers to index funds, not just in 2021 but over the past decade. The trend has been the same whether we are talking about retail or institutional investors. Index funds have become the default choice,” Mr. DeMaso said.
He cautioned that at some point — and at some asset level — those growth rates will have to come down for Vanguard, noting “Vanguard is no longer always the cheapest option around, but they have the reputation and brand power that others don’t,” Mr. DeMaso said.
Adviser Investments manages about $6 billion in diversified portfolios for investors.
Vanguard’s indexed and target-date funds are well-regarded by defined contribution plan sponsors, said Martin Schmidt, principal of defined contribution consulting firm MAS Advisors LLC, Chicago, in an interview.
“Vanguard’s target-date funds seem to dominate the selections by plan sponsors,” Mr. Schmidt noted, adding, “Vanguard is also utilized more across all market segments.”
Even as BlackRock has lagged behind Vanguard in recent asset percentage gains, Mr. Schmidt said “BlackRock tends to be utilized more in the larger market rather than across all market segments.”
“It’s not clear how 2022 will impact these firms. I expect both firms to continue to gain market share. When or if Vanguard will overtake BlackRock (in total assets) is something to watch for in the future,” Mr. Schmidt said.