Vanguard Takes on the Other ETF Giants
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Monday, November 01, 2010

Vanguard Takes on the Other ETF Giants

Vanguard's [see profile] low-cost ETFs have helped make it the largest mutual fund manager by assets in the U.S., according to Bloomberg Businessweek. Now, the company is using its low cost model to take away market share from ETF rivals BlackRock and State Street.

Vanguard reportedly sold $25.6 billion of ETFs in the U.S. in the first nine months of this year, 26 percent more than BlackRock and State Street combined, according to Chicago-based research firm Morningstar.

State Street and BlackRock dropped to a 70 percent combined share from 85 percent in 2005. Vanguard last month issued its biggest ETF throwdown to State street and BlackRock with the launch 20 new ETFs that track broad market benchmarks including the Standard & Poor's 500-stock index and the Russell 1000.

However, the current ETF champs say they're not straying from their strartegy. iShares managing director Noel Archard told Bloomberg that the firm is absolutely sticking to its strategy. "Our customers aren't asking for lower expense ratios." He said customers are asking for more services including education on how to use ETFs, multi-ETF asset-allocation models, and portfolio analysis.

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