Vanguard Enters The $1 Trillion ETF Club

June 27, 2019: 07:41 AM ET

Given its asset-gathering acumen and penchant for delivering some of the lowest cost exchange traded funds, it was just a matter of time before Vanguard entered the $1 trillion ETF club. The Pennsylvania-based index fund giant has done just that, joining BlackRock Inc.'s (NYSE: BLK) iShares brand as the only two U.S. ETF issuers in that club.

As of June 25, Vanguard had $1.01 trillion in U.S. ETF assets under management, trailing BlackRock's $1.55 trillion. Just two Vanguard funds –- the Vanguard Total Stock Market ETF (NYSE: VTI) and the Vanguard S&P 500 ETF (NYSE: VOO) -- combine for over $229 billion of the firm's domestic ETF assets.

Understanding how Vanguard got here isn't difficult. A lot of it has do to with the asset manager's notoriously low fees.

“Every ETF has an expense ratio, but Vanguard's average is 74% less than the industry average,” according to the firm.

Vanguard offers around 80 ETFs, a comparatively small lineup relative to rivals iShares and SPDR ETFs. More than 30 Vanguard ETFs, including the aforementioned VTI and VOO, rank among the 100 cheapest U.S.-listed ETFs.

On that list, the most expensive Vanguard ETF is the Vanguard Tax-Exempt Bond ETF (NASDAQ: VTEB), which has an annual expense ratio of 0.08%. Thirty-six U.S.-listed ETFs charge 0.05% per year or less and 25% of those funds are Vanguard products.

Of the 100 largest ETFs by assets, 26 are Vanguard funds. VTI and VOO are two of just four ETFs with more than $100 billion in assets.

It's not a stretch to say Vanguard's asset-gathering proficiency will continue, particularly given the firm's willingness to continually lower fees.

Led by $8.16 billion of inflows to VOO, four Vanguard ETFs are among this year's top 10 asset gatherers. None of the firm's ETFs are among the top 10 in terms of assets lost.

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