Vanguard Again Tops Industry in Annual ETF Inflows

Vanguard led the U.S. market in exchange-traded fund inflows in 2022, outpacing the industry’s biggest player in assets under management, BlackRock’s iShares, for the third consecutive year, according to recent data.

Last year ranked second for U.S. ETF industry inflows after a record 2021, roughly $600 billion in 2022 compared with $900 billion the previous year, with data from difference sources varying somewhat.

Investors looking for safety in a turbulent market turned heavily to ETFs, research firm Morningstar noted.

Vanguard saw $192 billion in new funds versus $171 billion for iShares, according to data from ETF.com. Morningstar estimated similar figures for the firms’ 2022 ETF inflows — $192.7 billon for Vanguard and $165.5 billion for iShares.

Pacific Investment Management Co. led in ETF outflows, according to research from ETF.com, which found that three debt-focused ETFs led PIMCO’s almost $3.4 billion in outflows.

Morningstar noted last week that Vanguard held 25.8% of U.S. ETF market share at year-end 2019 versus 38.7% for iShares, while at year-end 2022, Vanguard represented 29% compared with 33.8% for iShares.

“Vanguard secured its annual flows three-peat with sustained success from its plain-vanilla stock index funds. Its stock ETFs reeled in $143.5 billion in 2022 — about twice as much as iShares’ equity lineup, which is about the same size,” Morningstar Research Services manager research analyst Ryan Jackson wrote in a post last week.

 Vanguard provides “cheap, easy-to-understand, broad access to different markets,” Bryan Armour, Morningstar passive strategy research director for North America, told ThinkAdvisor on Monday.

“Rather than having a long roster of different strategies that cater to any possible investor, they really concentrate on bringing the same sort of strategy to different segments of the market,” Armour added. “They’ve built the reputation for being a thoughtful and investor-centric supplier of cheap beta. And I think that’s really just been the tailwind for them.

As investors move into index funds, they think of Vanguard, he added.

Dave Nadig, financial futurist at data and analytics firm VettaFi, offered a similar view via email Monday.

“Vanguard has a strong following with retail advisors in particular, and their product line is really well-designed for folks looking just to get low-cost beta. They also consistently survey as having one of the most trusted brands in financial services,” Nadig told ThinkAdvisor.

“While they are not the cheapest in every category in which they compete, they’re generally close, and so I believe there’s just a comfort level for many investors being with Vanguard,” Nadig said. “That said, all is hardly lost for competitors. There’s still plenty of room for innovation in the ETF (space) and Vanguard is notoriously conservative when it comes to their pace of product launches. I suspect this trend will continue, not just for them, but for other low-cost beta providers like JP Morgan and Schwab.”