BlackRock vs. The Vanguard Group: a Comparison for Investors

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  • Choosing the right investment company is vital to a successful growth strategy. Compare BlackRock vs. The Vanguard Group in key areas before making a decision.

Choosing the right investment company for your needs is vital to a successful asset growth strategy. As two of the industry's top wealth management firms, BlackRock and The Vanguard Group have plenty to offer potential investors. So, if you’re thinking about entrusting your money to either of these financial giants, here’s what you should know about the services they offer, and how they compare in several key areas.

An Overview of BlackRock

For more than three decades, BlackRock has been providing advisory, investment and risk management services and solutions to clients worldwide, including:

  • Individuals
  • Families
  • Governments
  • Charities
  • Schools
  • Nonprofits
  • Small businesses

As one of the industry's biggest wealth management companies, the firm's collection of assets under management is one of the largest in the world. BlackRock is also the parent company of Aladdin, an end-to-end investment management system that delivers comprehensive portfolio management tools to institutional investors, and iShares, one of the largest ETF providers in the world. Plus, with more than 1,300 socially and environmentally conscious funds to choose from, BlackRock is a leading provider of sustainable investment solutions.

An Overview of The Vanguard Group

Established in 1975, The Vanguard Group is an investor-owned company that specializes in providing affordable investment options. The firm provides investor solutions, retirement services and financial advice to more than 30 million clients, which include individual investors, institutions and financial professionals. Although The Vanguard Group started out offering only index mutual funds, it has since expanded into target-date and exchange-traded funds, and it specializes in long-term and retirement investments.

The Vanguard Group currently has more than $7 trillion in assets under management, making it one of the largest wealth management companies in the world. Although the company's trading platform is limited and was intended primarily for buy-and-hold investors, it does include an automated investment advisor and plenty of retirement-planning tools.

BlackRock's Available Investment Services

BlackRock’s wealth management arm provides investment and financial planning services to individual and institutional clients worldwide, and its subsidiary, iShares, makes ETF investing efficient and transparent for investors of all levels. The firm doesn’t limit services to high-net-worth investors, and many investments can be opened with a minimum of $250,000. 

BlackRock offers in-house and third-party investment accounts, private funds and other options to accommodate their investors' risk tolerance levels, time horizons, and current and future income needs. Besides choosing an overall investment strategy, BlackRock investors can also select from a wide array of funds, including:

  • Real estate
  • Stocks and bonds
  • Cash funds, such as money market accounts or short-term bonds
  • Commodities, including energy resources, precious metals and agricultural products

Multi-asset strategies, which combine different asset classes, can be used to diversify an investor’s portfolio or achieve a specific investment objective. BlackRock's fees vary by account type.

The Vanguard Group's Available Investment Services

The Vanguard Group helps its clients develop personalized retirement and long-term investment plans, so they can maximize asset growth. Investors may choose to enroll in the company’s personal advisor service, work with a digital financial planner or select a DIY investment option. High-net-worth individuals who enroll in Vanguard's advisory service may also access trust services and will be assigned a team of financial advisors to help with wealth planning.

Vanguard’s investors can choose from several main products, including:

  • CDs
  • Exchange-traded funds
  • Stocks and bonds
  • Money market funds
  • Mutual funds, including indexed and actively managed funds

The Vanguard Group also offers all-in-one funds, which let investors diversify their portfolios to reduce their risk.

How Is BlackRock Different From The Vanguard Group?

Overall, BlackRock and The Vanguard Group offer similar investment services, including index, mutual and exchange-traded funds. However, the companies differ significantly in structure, technology and sustainable investment practices.

Structure

The Vanguard Group is a mutual company. Because its investors essentially own the firm, it can provide most of its services at cost. If The Vanguard Group does make a profit, this money is returned to investors as dividends.

BlackRock, on the other hand, is a publicly traded entity, so it prioritizes making money for its shareholders. Interestingly, The Vanguard Group is the largest owner of BlackRock stock.

Technology

BlackRock's Aladdin portfolio management software provides comprehensive wealth management tools for institutional investors and financial professionals. The software, which delivers advanced analytics, compliance tools and accounting assistance, works across a wide range of asset classes.

By comparison, The Vanguard Group's robo advisor targets individual investors, especially younger savers who prefer digital tools and advice. Vanguard's Digital Advisor offers affordable professional money management tools that use the firm's proven investment methodology.

Sustainable Investments

BlackRock is known for its commitment to socially and environmentally conscious investment strategies. The firm takes an active role in promoting practices and policies that encourage global stewardship while creating value for their investors. The company also supports the progression to a net zero economy by 2050 by promoting the elimination of greenhouse gas emissions.

For socially conscious investors, The Vanguard Group also offers several ESG investment options, which prioritize environmental, social and governance issues. However, they don’t boast the same overarching commitment to sustainable investing as BlackRock.

BlackRock vs. The Vanguard Group: Which Should You Choose?

BlackRock and The Vanguard Group are both industry powerhouses with a global reach and a stable financial outlook, so investors can feel confident entrusting their money to either brokerage. Additionally, these firms generally offer similar investment options, including index and mutual funds, and both companies can accommodate individual and institutional clients of varying net worth.

Ultimately, which investment company you choose should reflect your unique needs as an investor, including how much you have to invest, your time horizon, and your individual preferences regarding a company's platform, technology and investment methodology. For example, investors who want to participate in socially and environmentally conscious asset growth strategies may prefer working with BlackRock, while investors who want a simple long-term strategy to provide retirement income may prefer working with a company such as The Vanguard Group.

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