Morningstar - Fall 2019 - 18

Dispatches

Global Briefs
TRENDS

Fees Drive ETF Flows
Three firms dominate the $3.4 trillion U.S. exchangetraded funds industry: BlackRock's iShares
has a 39% share, Vanguard 25% and growing, and
State Street 16% and shrinking. A decade ago,
iShares had 49% market share, State Street 26%,
and Vanguard less than 10%.
"The evolution of market shares among the big three
has been driven in large part by the growth in

iShares

State Street

ETF usage among advisors-who have shown
a strong preference for the lowest-cost, most-broadbased funds," says Ben Johnson, Morningstar's
global director of passive strategies research. That
gave Vanguard an edge.

By matching or undercutting Vanguard on price
and rolling out competing ETFs, iShares has
stayed competitive. State Street, however, hasn't

cut fees on flagship SPDR S&P 500 ETF SPY in more
than a decade.
The chart plots each firm's ETFs by expense
ratio and asset growth. Vanguard's are among the
cheapest and are increasingly popular.
Gabrielle DiBenedetto is a data journalist with Morningstar.

Vanguard

Prospectus Net Expense Ratio
1.00%

0.75

0.50
SPDR S&P 500 ETF SPY
$248.7B Total Net Assets

iShares Core S&P 500 ETF IVV
$169.6B Total Net Assets

Vanguard Total Stock Market ETF VTI
$108.6B Total Net Assets

0.25
0

-$10B
0
3-Year Estimated Net Flows

Source: Morningstar Direct. Data as of 05/31/2019.

Prospectus Net Expense Ratio
1.0%

Source: Morningstar. Data as of 11/30/2017

$4.9T
Total Net
Assets

iShares

Bubble size represents each fund company's
total assets under management.

Will Libra Tip the
Scales for Facebook...

Vanguard

effect moat source because Facebook's 2.4 billion
According to the white paper published by
Schwab
State Street
DFA
the association, the currency is likely to be less
users, as well as its apps like WhatsApp and
0.5
Dodge
Cox cryptocurrencies such
volatile
than& other
Messenger, could be more effectively monetized.
American Funds
as Bitcoin, because Libra will be backed by bank
However, neither the cryptocurrency nor the
JPMorgan
T. Rowe
digital wallet will meaningfully drive the overall
deposits
andPrice
short-term government securities
AMERICAS
Goldman Sachs
top or bottom lines during the next few years,
held in the Libra Reserve, managed by the
BlackRock
United States
in our view. We are maintaining our $200 fair value Fidelity
association. While the association
has 28 founding0
PIMCO
Invesco
estimate and recommend waiting for a wider
members, this is likely to rise to 100 by early
Templeton
Facebook FB Franklin
announced
on June 18 that it, along
2020. Investments made by the 28 founding
margin of safetyWellsFargo
before investing in thisMFS
wide-moatOppenheimer
Federated brand.
with various investors, will launch a new
members include at least $10 million each; some
and high-uncertainty
Dreyfus
may become node operators for the currency's -0.5
cryptocurrency, Libra. It will make its own digital
blockchain. Each member is limited to one
wallet, Calibra, available next year as well.
Facebook and other members of the Libra
These may strengthen the company's network
vote or 1% of total votes. Current members include
Association plan to launch Libra early in 2020.
-1.0
-$10B
0
18
3-YearMorningstar
EstimatedFall
Net2019
Flows

Morningstar - Fall 2019

Table of Contents for the Digital Edition of Morningstar - Fall 2019