After a long period of expansion in the U.S. fund industry, Vanguard has recently seen a decline in market share. Morningstar notes that this does not indicate large-scale investor outflows; some of the shift stems from assets moving from traditional funds into collective investment trusts.
Some assets have been transferred to a collective investment trust.
Morningstar stated that part of Vanguard's share decline is due to some funds shifting from traditional products like mutual funds to collective investment trusts. These adjustments alter the asset distribution under the reporting metrics and therefore cannot be simply interpreted as client attrition.
Over the past several decades, Vanguard has grown rapidly by relying on a low-fee strategy, driving the entire U.S. fund industry to lower its charges. The company states that since its founding, it has reduced fund fees more than 2,100 times cumulatively, and its current weighted-average fee is approximately 0.06%.
The low-fee advantage is being caught up by competitors.
According to the company’s estimates, the next round of fee reductions from 2025 to 2026 could save investors approximately $600 million. However, competitors have gradually adapted to this model, and competition among several major institutions has shifted from purely competing on fees to focusing on ETFs, index products, and investment services.
Among these, BlackRock holds an advantage in the third-party model portfolio segment, with related assets under management of approximately $308 billion. Fidelity continues to maintain a strong position in actively managed funds, retirement accounts, and money market products.
Passive investing still dominates the field.
Despite the decline in market share, Vanguard remains a massive player in the passive investment market. Morningstar estimates that Vanguard manages over $11 trillion in assets across U.S.-registered mutual funds and ETFs, accounting for approximately 44% of all passive fund assets.
Its flagship product, VOO, recently surpassed $1 trillion in assets under management, becoming the first ETF to reach this milestone, demonstrating Vanguard’s continued strength in broad-market index and passive investing.