After a long period of expansion in the US fund industry, Vanguard has recently seen a decline in market share. Morningstar pointed out that this does not mean a large-scale withdrawal of investors; some of the changes are due to assets being transferred from traditional funds to collective investment trusts.

Some assets are shifting towards collective investment trusts.

Morningstar indicates that one of the reasons for the decline in Vanguard shares is the shift of some funds from traditional products such as mutual funds to collective investment trusts. Such adjustments change the asset distribution in statistical terms, and therefore cannot be simply understood as customer loss.

Vanguard has rapidly grown on a large scale over the past few decades by adopting a low-fee strategy, and has contributed to driving down fees across the US fund industry. The company claims that since its establishment, it has reduced fund fees more than 2,100 times in total, and the current average fee rate, calculated on an asset-weighted basis, is approximately 0.06%.

The advantage of low fees is being caught up with by competitors

According to the company's estimates, the new round of fee reductions from 2025 to 2026 could save investors approximately $600 million. However, competitors have gradually adapted to this model, and the competition among several large institutions has shifted from simply competing on fees to focusing on ETF, index products, and investment services.

Among them, BlackRock holds a dominant position in the field of third-party model portfolios, with a related management scale of approximately $308 billion. Fidelity, on the other hand, continues to maintain a strong position in actively managed funds, retirement accounts, and money market products.

Passive investment remains dominant in the field.

Despite the decline in shares, Vanguard still holds a substantial presence in the passive investment market. Morningstar estimates that the total assets of the US registered mutual funds managed by Vanguard and ETF have exceeded $11 trillion, accounting for approximately 44% of the total assets in passive funds.

Its flagship product, VOO, has recently also surpassed a asset scale of $1 trillion, becoming the first ETF to reach this threshold. This demonstrates that Vanguard still has a solid foundation in the areas of broad-based indices and passive investment.