If you’re an owner of an exchange-traded fund (ETF) or index fund, chances are they are from either Vanguard or Blackrock.
These two companies are the powerhouses in the industry. Vanguard has $7.9 trillion in assets under management, and Blackrock has $9.5 trillion.
Vanguard
Vanguard was established in 1975 by Jack Bogle, who believed that a mutual fund company should not have outside owners. Instead, shareholders of the Vanguard Group own the company’s different funds.
Blackrock
Blackrock started in 1988 with eight people in a single room who shared a determination to put clients’ needs first. By 1999, Blackrock rapidly grew to $165 billion in assets under management and then went public on the New York Stock Exchange.
An index fund is a type of mutual fund or ETF, though the unique aspect always matches the components of an index or specific financial market. Index funds represent a theoretical segment of the market and aim to match the risk and reward of a specific need.
An exchange-traded fund (ETF) typically matches an index similar to index investing. However, an ETF can trade on an exchange, one of the most significant differences between an ETF and an index fund. In addition, an ETF can be bought and sold throughout the day on an exchange instead of trading day end.
The Vanguard and Blackrock funds are the Vanguard 500 Index Fund ETF (VOO), and iShares Core S&P ETF (IVV) are two of the most popular funds. On the surface, these funds are nearly identical, though there are subtle differences between the two.
VTI and ITOT are similar but have more significant differences than VOO vs. IVV. For example, the assets under management for VTI are 284.47 billion and $44.31 billion for ITOT. In addition, the average daily volume is higher for VTI at 955.94 billion than ITOT at 258.7 billion. A higher daily trading volume means that the security is more competitive and less volatile.
Finally, let’s look at two emerging market ETFs with the Vanguard Emerging Market ETF (VWO) and iShares Emerging Market ETF (EEM). Unlike the first two ETFs, these stocks have a solid international presence.
One final comparison we’ll make is the differences between the ownership structure of Vanguard and Blackrock. As noted earlier, Vanguard has a unique ownership structure where the clients own the company, and no outside owners seek to profit from the company’s investments.
From the comparison above, you see there aren’t significant differences between similar Vanguard and Blackrock funds. Your decision on where to invest your money may come down to other factors such as the convenience of their platform or other services on how you use either company.