Battle at The Top: iShares Nudging Vanguard for ETF Inflows
With inflows to U.S.-listed exchange-traded products on pace for a record year, another interesting, but related story is developing.
Vanguard's three-year reign as the top gatherer of ETF assets is in danger. BlackRock's (NYSE: BLK) iShares unit, the world's largest ETF sponsor, holds a slight lead over Vanguard with just a few trading days left in 2012, according to InvestmentNews. Citing Morningstar data, InvestmentNews reports iShares attracted $47.2 billion in ETF inflows through the first 11 months of the year compared to $46.8 billion for Vanguard.
There are plenty of theories to go around as to why iShares may capture the 2012 crown of top ETF asset gatherer. An oft-cited reason for the recent, albeit slight, lead established by iShares is decision by Vanguard to drop MSCI (NYSE: MSCI) indexes on 22 of its ETFs.
That announcement was made in early October and Vanguard has since said it expected some asset leakage from ETFs such as the Vanguard MSCI Emerging Markets ETF (NYSE: VWO) as investors wait to see how the Vanguard ETFs look with their new indexes.
Another logical reason is the introduction of new ETFs. As in Vanguard, the third-largest U.S. ETF sponsor, has only introduced one new ETF this year, the Vanguard Short-Term Inflation-Protected Securities ETF (NYSE: VTIP). Conversely, iShares has been one of the most prolific issuers of new ETFs in 2012.
Some of those new funds have proven immediately successful in terms of attracting assets. For example, the iShares Emerging Markets High Yield Bond Fund (NYSE: EMHY) debuted in early April and now has almost $198 million in assets under management. The iShares Core MSCI Emerging Markets ETF (NYSE: IEMG), which debuted in October as a lower-cost alternative to VWO and the iShares MSCI Emerging Markets Index Fund (NYSE: EEM), has already raked in $142.4 million in AUM.
iShares has also benefited from soaring inflows to some of its previously existing products such as the iShares MSCI USA Minimum Volatility Index Fund (NYSE: USMV), the iShares MSCI Emerging Markets Minimum Volatility Index Fund (NYSE: EEMV) and the iShares High Dividend Equity Fund (NYSE: HDV), all of which have far higher AUM totals today compared with a year ago.
Then again, perhaps it is worth noting that the rivalry between iShares and Vanguard is arguably overstated. At least sometimes it is because when it comes to total assets under management, the gap between the two firms is about $311 billion, according to Index Universe data.
Said another way the asset gap between iShares and Vanguard larger than Greece's 2011 GDP. Of course, it should be forgotten that State Street's (NYSE: STT) State Street Global Advisors unit sits in the number two position among U.S. ETF sponsors. SSgA has almost $328.7 billion in AUM compared to nearly $244.5 billion for Vanguard. That asset gap of $84.2 billion is more than double the size of Costa Rica's 2011 GDP.
For more ETF inflows, click here.
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