Vanguard’s extraordinary expansion across the U.S. fund industry may finally have hit its ceiling.
Bloomberg ETF analyst Eric Balchunas highlighted new industry data showing Vanguard’s share of U.S. mutual fund and ETF assets declining after roughly five decades of almost uninterrupted growth, following a plateau near 27%.
Morningstar data supports the broader trend. Vanguard held about 28% of U.S. fund assets at the end of 2024, but its share among the largest 150 fund families slipped by roughly one percentage point during 2025. Vanguard, BlackRock and Fidelity together still controlled about 50% of U.S. fund assets, illustrating how concentrated the industry remains.
Importantly, Morningstar said part of Vanguard’s decline reflected assets being transferred from traditional funds into collective investment trusts, so the shift should not be interpreted as investors simply abandoning the firm.
Vanguard May Have Created Its Own Competition
The bigger story is what Balchunas called the culmination of the “Vanguard Effect.”
Vanguard spent decades forcing the investment industry to compete on cost. Its low-fee index funds helped turn passive investing mainstream and pressured rivals to cut expense ratios across mutual funds and ETFs.
Vanguard itself says it has reduced fund expenses more than 2,100 times over its history and now has an asset-weighted average expense ratio of just 0.06%. The firm expects its 2025–2026 fee reductions to save investors about $600 million.
But competitors have adapted.
BlackRock has built one of the world’s largest ETF franchises through iShares, while Fidelity combines low-cost passive products with active funds, brokerage services and retirement accounts. Morningstar notes that Vanguard, BlackRock and Fidelity now collectively hold roughly half of U.S. fund assets.
Our BlackRock vs Vanguard comparison shows how the firms increasingly compete across ETFs, index products and investment services, rather than purely on price.
Vanguard Still Dominates Passive Investing
The decline is notable precisely because Vanguard remains enormous.
Morningstar estimates Vanguard manages more than $11 trillion in U.S.-domiciled mutual funds and ETFs and controls about 44% of passive fund assets, roughly equal to the next four largest passive managers combined.
Its flagship VOO ETF also recently crossed $1 trillion in assets, becoming the first ETF to reach that milestone. Coinpaper’s recent VOO analysis shows how powerful Vanguard’s passive-investing franchise remains.
At the same time, BlackRock and Fidelity have found growth areas beyond traditional broad-market indexing. BlackRock dominates third-party model portfolios with roughly $308 billion, while Fidelity remains a major force in active funds, retirement accounts and money markets.