Vanguard vs. BlackRock: what’s the difference?

Summary 

Vanguard vs. BlackRock: what’s the difference?  

Vanguard and BlackRock are both dynamos in the industry, especially where exchange-traded funds (ETFs) or index funds are concerned, making deciding between the two very difficult.

Vanguard is the world’s second-largest investment company or brokerage firm, offering a range of active and passive options, as well as a competitive fee structure and other attractive selling points.  

BlackRock, Inc. is the world’s largest investment firm and asset manager. The firm offers a multitude of investment strategies, all of which see you leave your portfolio management to one of the firm’s financial advisors.  

Who owns BlackRock and Vanguard?

BlackRock was founded in 1988 by Larry Fink and a number of other partners.

Today, the company is not owned by a single individual or company but instead is publically traded. This means individuals and organizations can buy shares in the company, becoming partial owners.

According to Techopedia, institutional investors are the largest owners of BlackRock shares, holding 51.78% of the company’s stock. As of March 2024, the top five largest BlackRock owners are:

The ownership of Vanguard is very different.

Vanguard is owned by its member funds, which in turn are owned by fund shareholders. This means Vanguard has no outside investors other than its shareholders.

According to Vanguard, this radical ownership structure is unique in the asset management industry.

BlackRock vs. Vanguard fees: what can I expect?  

Understanding the fees set by any company you’re considering working with is absolutely crucial. Let’s take a closer look at BlackRock and Vanguard’s fees.  

Vanguard

Vanguard offers a competitive fee structure for its services.

To access a Vanguard financial advisor, you’ll need a minimum of $50,000 in assets within eligible Vanguard Brokerage Accounts. The advisory fee is approximately 0.3%, which means that with a $50,000 investment, the maximum annual fee for all-index investment options would be $175.

For trading, the firm offers $0 stocks and ETF trading. It charges a $1.00 per contract fee to trade options contracts. 

While Vanguard mutual funds and those on the no-fee list are free to all investors, the firm charges a $20 fee to trade third-party mutual funds not included on the list. Reduced-price options are available for accounts with at least $1 million in assets. There are no inactivity or non-trading fees, and the firm doesn’t require a minimum account balance. 

BlackRock

BlackRock charges an array of fees using different schedules, making fees one of the most important differences between BlackRock and Vanguard.

These schedules and fees depend on the strategy you choose and the type of account you open. Some accounts have standard fee schedules, while others may be subject to negotiation. 

For example, BlackRock’s Wrap Fee Schedule for Equity, Balanced, Retirement Journey, and WDP Strategies starts at 2.50% for the first $500,000 and grows incrementally smaller as your account balance increases.

The SMA Program: Fixed-Income Investment Strategy fee schedule starts at 0.35% for the first $1 million.

The Non-Wrap Fee Schedule for Equity and Balanced Investment Strategies starts at 1.00% for the first $1 million, and the Non-Wrap Fee Schedule for Single-Style Fixed-Income Investment Strategies starts at 0.90% for the first $1 million.  

The Non-Wrap Fee Schedule for Multi-Strategy Fixed-Income and Target Income Investment Strategies starts at 1.50% for the first $500,000, and the SMA Program: Equity Investment Strategy starts at 0.65% for the first $1 million. The Liability-Driven Investing Fixed-income Strategies starts at 0.25% for the first $25 million, and the SMA Program: Fixed-Income Laddered Investment Strategy fee is 0.10% for all asset levels. 

Is Vanguard or BlackRock better? 

When choosing between BlackRock and Vanguard, it's wise to consider the pros and cons of both firms.

The pros and cons of Vanguard

Pros:

Cons:

The pros and cons of BlackRock

Pros:

Cons:

Vanguard or Blackrock: which should I choose? 

Think carefully before deciding between Vanguard and BlackRock.

The two firms have different offerings, and one of them might be a much better option for your circumstances, needs, and goals.  

It’s also essential to understand that while Vanguard offers passive and active options and lets you use data and research to research, build, and maintain your portfolio, BlackRock does not.

Instead, Blackrock’s professional financial advisors and investors will manage your portfolio according to your preferred strategy.  

It’s best to ask a financial advisor for guidance in choosing an investment company. 

Can I open a brokerage account with both BlackRock and Vanguard? 

Vanguard primarily focuses on managing its own funds and ETFs. BlackRock offers various investment options through its iShares ETFs, but it may not provide full-service brokerage accounts.  

If you’re looking for an option that lets you play a hands-on role in your investing decisions, Vanguard might be the better option. If you’re looking for passive options, either firm could be the answer. 

Which platform offers better support for long-term, passive investing? 

Vanguard is renowned for its commitment to passive investing and is a popular choice for those seeking low-cost, long-term investment strategies.

BlackRock offers a variety of options, including a good balance of active and passive options.  

Can I access my Vanguard or BlackRock accounts online and through mobile apps? 

Yes, both Vanguard and BlackRock offer online platforms and mobile apps, providing convenient access to your investment accounts and tools. 

How does Vanguard's investment philosophy differ from that of BlackRock? 

Vanguard is often associated with its philosophy of passive investing, emphasizing low-cost index funds. BlackRock offers a variety of investment strategies, including actively managed funds. 

Need more information? 

It’s seldom an easy choice between Vanguard and BlackRock. As the world’s two largest investment firms, they are reputable and trustworthy. Both offer active and passive options, although Vanguard is better known for its passive options.  

When deciding which firm is best for your needs, consider fee structure and whether you want to manage your portfolio or leave it to an advisor. If you need assistance, let Unbiased match you with an SEC-regulated financial advisor whom you can turn to for expert financial advice when you need it.