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Rating:ETFs Highlight Differences at BGI and Vanguard Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, July 08, 2010

ETFs Highlight Differences at BGI and Vanguard

News summary by MFWire's editors

With Vanguard rolling out nearly a score of new ETFs that take on existing products by the end of the year, watchers are starting to focus on the competitive horse race between Vanguard and BlackRock. One of those races where the two firms already go head-to-head is in emerging markets, where both firms have an MSCI-benchmarked ETF.

So far this year Vanguard is winning that race, reports InvestmentNews. However, BlackRock pulled out a win in June when its iShares MSCI Emerging Markets Index Fund (EEM) took in a net $1.7 billion in June, more than double the $787.7 million net for Vanguard's Emerging Markets ETF (VWO).

So far this year, the BlackRock ETF has taken in $1.6 billion compared to $6.8 billion for the $24.7 billion AUM Vanguard product.

The article hints that BlackRock may be benefiting from a decision to use active trading strategies to boost returns for its ETF. It started using those strategies, which included treaking exposures to different markets and changing how the ETF is rebalanced, in recent months. Yet that more active strategy also raises costs for the product, which come in at 71 basis points compared to 27 at Vanguard.

Because of the use of sampling rather than complete replication of the benchmark, the BlackRock ETF also has a larger tracking error, according to the article.

Noel Archard, an iShares managing director, told the trade publication that the strategy "is an ongoing process." 

Edited by: Sean Hanna, Editor in Chief

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