In fund sales, Vanguard leads but BlackRock’s gaining

Vanguard had $12.3 bn in inflows in April. But BlackRock’s iShares eclipsed that figure with about $17 bn. Vanguard’s year-to-date growth continues to slow year over year.

The Obama adminstration’s fiduciary rule may be gone but individual advisors and plan advisors continue to prefer cheap broad-based index funds and exchange trade funds over actively managed funds.

Of the ten funds with the highest net inflows in April 2018, all were index funds or ETFs. Six were BlackRock iShares ETFs, three were Vanguard index funds and one was a Fidelity index fund, according to Morningstar Direct’s monthly asset flow report.

Meanwhile, five of the 10 funds with the highest net outflows were Fidelity funds. “Fidelity had overall outflows of about $5.6 billion, its worst month since November 2016,” the report said, adding that. Fidelity’s active funds had $11.3 billion in net redemptions while its passive funds collected net $5.7 billion.

According to the report:

Vanguard was near the top of the fund-family league tables with $12.3 billion in inflows. But BlackRock’s iShares eclipsed that figure with about $17 billion in inflows. Vanguard’s year-to-date growth continues to slow year over year.

Through the first four months of 2017, Vanguard took in an estimated $141.5 billion. So far in 2018, the firm has only collected about half that amount, $71 billion. The firm’s one-year organic growth rate of 7.4% is less than half of iShares’ 15.1%. This slowing growth shouldn’t be surprising given that Vanguard is more than triple iShares’ size, but it’s notable since Vanguard defied the odds, growing at scale in recent years, a rare anomaly.

While iShares Short Treasury Bond led the way in April, so far in 2018 iShares Core MSCI EAFE IEFA and iShares Core MSCI Emerging Markets IEMG lead the firm year-to-date with inflows of $16.4 billion and $8.0 billion, respectively.

The contrast with SPDR State Street Global Advisors is striking. Both firms were ETF pioneers, but iShares continues to separate itself from its rival. Over the past 12 months, iShares has collected about $168 billion versus just $24 billion for SPDR funds.

As a result, while SPDR’s market share is basically flat over that span at 3.34%, iShares’ has grown to 7.54% from 6.93%. As mentioned last month, SPDR falls short on cost relative to offerings from iShares and others. This is having a meaningful impact on investor demand.

Morningstar estimates net flow for mutual funds by computing the change in assets not explained by the performance of the fund and net flow for ETFs by computing the change in shares outstanding.

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