• / Free eNewsletters & Magazine
  • / My Account
Home>Research & Insights>Fund Times>It's Groundhog Day (Again) for the U.S. Fund Industry

Related Content

  1. Videos
  2. Articles
  1. Measuring Moats in Social Media

    Twitter, Facebook, LinkedIn, and Google each have moats, but there are some interesting distinctions among their competitive advantages.

  2. When to Sell Dividend Stocks

    Investors shouldn't focus just on yield, but also on other factors, such as dividend growth rates and company familiarity, when considering selling dividend payers, says DividendInvestor editor Josh Peters.

  3. Peters: Look Beyond Dividend Growth

    Balancing above-average current yield with a history of dividend growth should help investors meet their total-return goals, says DividendInvestor editor Josh Peters.

  4. Bogle's Expectations for Stocks and Bonds

    The Vanguard founder says investors may face lower-than-normal real returns on stocks and should hold bonds for ballast and not return.

It's Groundhog Day (Again) for the U.S. Fund Industry

Vanguard, BlackRock, and plain-vanilla indexes dominate the sales charts.

John Rekenthaler, 07/25/2017

Deja Vu
Ask 100 people to name a film about a man caught in time, doomed to repeat his day, and 98 of them would immediately respond, "Groundhog Day." (The rest of us would cite "Source Code," an underrated, Chicago-based thriller.)

Ask them what industry is stuck in a similar situation, and you'd receive a whole lot of blank looks. But "mutual funds" would be a good answer.

The pattern emerged during the early 2000s, expanded with 2008's stock market crash, and has settled into what appears to be inevitability. Two companies, Vanguard and BlackRock, consistently dominate fund sales. (By "fund," I mean both open-end mutual funds and their younger cousins, exchange-traded funds.) Among the hundreds of companies that collectively run 30,000 share classes, the real action occurs at a handful of major index funds, run by two sponsors.

Two Families
Let's start with the 2016 fund-family results.

Of course, that "Everybody Else" bar involves some sleight of hand. It's not that every fund company besides Vanguard and BlackRock suffered net redemptions. Included in the Everybody Else category were many companies that enjoyed positive sales. However, with $55 billion, State Street landed far behind the two leaders. Only three additional firms, DFA, Schwab, and AQR, passed the $10 billion mark. The 2016 marketplace can fairly be called a duopoly.

So can the first six months of 2017.



is vice president of research for Morningstar.

©2017 Morningstar Advisor. All right reserved.