Fundsters who have been following mutual fund flow data in recent years may not be surprised to hear that Vanguard [see profile] has now surpassed Fidelity [see profile] as the biggest fund firm in the country, at least in terms of assets. Citing ICI data to that effect, Bloomberg's Charles Stein highlights the swap, which took place in March. (Vanguard boasted $1.31 trillion in non-ETF fund assets on July 31, while Fidelity had $1.24 trillion.)

Yet assets are only one measure of size. Bloomberg makes no mention of how big the two companies are in terms of employees, a comparison Fidelity would probably easily win (given its higher average fee level on its assets, as well as its plethora of related business lines). Another measure for comparison might be revenue or income (net or operating), yet Vanguard doesn't release any of that data: Fidelity claimed $2.52 billion of operating income from $11.5 billion of revenue last year. And the article barely mentions the other top three fund giant, Capital Group's American Funds [see profile].

Of course, some fundsters may wonder how useful the comparison is, given how different the managers are. Vanguard offers passive funds and sub-advised, emphasizing low-cost (and consequently somewhat shying away from smaller accounts, both in the retail and the 401k(k) worlds). Fidelity focuses on active, internally managed funds (and almost avoids ETFs altogether), and works in a number of related businesses: it has a mutual fund supermarket, a discount and online brokerage,payroll and other benefits businesses, and a mammoth retirement plan business that stretches across different market segments and distributes Fidelity's funds. And American Funds focuses on a focused lineup of funds, all of which are advisor-sold only (leaving the likes of Fidelity and Vanguard to compete as household names) and actively managed.

Yet all three do have at least one other thing in common: none are publicly-traded.

Bloomberg quotes several advisors and fund industry insiders, including: Jack Albin, chief investment officer for Harris Private Bank; John Bonnazio, editor of Fidelity Insight; Kent Grealish, an advisor outside San Francisco; Rebecca Katz, a spokeswoman for Vanguard; Russel Kinnel, director of fund research at Morningstar; Nancy Koehn, a Harvard Business School professor; Vin Loporchio, a spokesman for Fidelity; James Lowell, editor of FidelityInvestor.com; Vanguard managing director Michael Miller; and Dan Wiener, editor of the Independent Adviser for Vanguard Investors. 

Edited by: Neil Anderson, Managing Editor


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