Schroders is closing in on Vanguard in the battle for active exchange-traded funds (ETFs), with its assets under management growing 22% to $7.4bn in the past year, according to data from Morningstar. The British asset manager's active ETF business has been expanding rapidly, narrowing the gap with the US index fund giant, which remains the largest player in the space.
Schroders' Rapid Growth in Active ETFs
Schroders' active ETF assets reached $7.4bn by the end of the first quarter, up from $6.1bn a year earlier, representing a 22% increase. This growth is part of a broader trend in the industry, as investors increasingly turn to actively managed ETFs for their flexibility and potential for outperformance.
The company's push into active ETFs is led by its global head of ETFs, who has been expanding the product range to cover equities, fixed income, and multi-asset strategies. Schroders has also benefited from the growing popularity of ETFs among European investors, who are seeking lower-cost alternatives to traditional mutual funds.
Vanguard's Dominant Position
Despite Schroders' progress, Vanguard remains the clear leader in active ETFs, with assets under management significantly higher than its competitors. Vanguard's active ETF range, which includes its popular actively managed equity and bond funds, has attracted substantial inflows from investors seeking low-cost exposure to active management.
According to Morningstar, Vanguard's active ETF assets stood at $18.2bn at the end of the first quarter, more than double Schroders' total. However, the gap is narrowing, as Schroders' growth rate outpaces Vanguard's, which grew by 12% over the same period.
Competitive Landscape and Future Outlook
The active ETF market is becoming increasingly competitive, with traditional asset managers like Schroders and Vanguard competing with newer entrants such as DWS and Fidelity. Analysts believe that the market for active ETFs will continue to grow, driven by investor demand for transparency, liquidity, and tax efficiency.
Schroders' strategy involves offering a range of actively managed ETFs that combine the benefits of active management with the structural advantages of ETFs. The company has also been investing in technology and distribution to enhance its ETF platform, aiming to capture a larger share of the market.
As the competition intensifies, investors are likely to benefit from a wider choice of active ETF products, potentially leading to lower fees and improved performance. Schroders' recent growth suggests that it is well-positioned to challenge Vanguard's dominance, although the US firm's scale and brand recognition remain formidable barriers.
