Vanguard vs BlackRock: what's the difference?

If you’re thinking of investing with a well-known provider, you may be considering using Vanguard or BlackRock. 

We explore the main differences between the two and the pros and cons. 

Vanguard vs BlackRock: what’s the difference? 

BlackRock and Vanguard are among the largest names in global asset management. 

Vanguard has $10.1 trillion in assets under management (AUM), while BlackRock has $11.48 trillion in AUM.  

Both firms offer various investment solutions, including mutual funds and exchange-traded funds (ETFs). However, they cater to slightly different markets.  

Vanguard is best known for its low-cost, passive investment strategies that appeal to long-term investors. It offers various investment options, including a wide range of ETFs. 

BlackRock offers passive options but has a more diverse portfolio. It also has the iShares brand, which has been a global leader in the ETF marketplace for over two decades.  

What are Vanguard’s and BlackRock’s specific investment strategies? 

Vanguard is a pioneer in passive investing, offering low-cost, diversified index funds. Their strategy focuses on long-term, low-maintenance investing, ideal for those who want to sit back and let the market work for them. 

As the funds are passive, they tend to have lower fees compared to active funds.  

Vanguard has the LifeStrategy range of funds, which are ready-made portfolios designed for investors who don’t want to build their own portfolio. 

As an example, LifeStrategy 40% Equity Fund is a global fund comprising 40% shares and 60% bonds and has a risk level of four out of seven. The ongoing charge is 0.22%.  

On the other hand, BlackRock offers a broader array of investment products, including ETFs via its iShares brand, which covers various countries, sectors and asset types.  

The MyMap range from BlackRock includes actively managed multi-asset funds that invest in various assets such as equities, bonds and alternative assets, but may focus more on the US. 

According to BlackRock, all MyMap funds charge 0.17% except for MyMap 4 Select Income, which charges 0.28%. 

While it also provides passive funds, BlackRock has more options for active trading, allowing investors to take a hands-on approach rather than relying on others to manage their money.  

Active funds often involve higher fees but aim to outperform market indices, making them suitable for more experienced investors or those working with a financial adviser. 

What fees can I expect from Vanguard and BlackRock? 

When comparing Vanguard and BlackRock, the firms have different fee structures, which can influence your investment decisions.  

Vanguard fees

Vanguard’s fees are well-known for being among the lowest in the industry at 0.15% of your investments, which is capped at £375 per year for accounts of over £250,000.  Vanguard also typically charges lower expense ratios, on average 0.05%, compared to the industry average of 0.18%.  

Ongoing costs can vary from 0.22% to 0.24% for ready-made portfolios and 0.06% and 0.78% for individual funds. Fund transaction costs also vary from 0.02% to 0.07% for ready-made portfolios and 0.01% and 0.69% for funds.  

For ETFs, there are one-off costs of between 0.02% and 0.32%, and it costs £7.50 to trade in real-time. There are no fees for transferring, switching funds, withdrawing money or closing your account. 

Vanguard generally avoids extra costs, but some specialised funds may charge slightly more. It also tends to have low investment requirements, making its funds more accessible to a broader range of investors.  

Blackrock fees

BlackRock fees, on the other hand, can be higher, especially for their actively managed funds, and are more variable. Fees also vary based on the investment vehicle you choose. 

As an example, BlackRock UK Fund has an annual management fee of 1.5% and ongoing charge of 1.66%, while iShares Physical Gold ETC has an ongoing charge of 0.12%.  

BlackRock funds may include extra costs like performance and exit fees, particularly for specialised ones, and often have higher minimum investment thresholds. 

Is Vanguard or BlackRock better? 

While Vanguard and BlackRock share similarities as major investment firms, they differ significantly in their product offerings and strategies.  

Each has distinct advantages and disadvantages, so it’s important to consider their pros and cons to determine the best fit for your investment needs. 

Pros of BlackRock  

• Wide investment range: BlackRock offers access to hundreds of funds, including equity, multi-asset and fixed income, as well as ETFs, offshore funds and unit trusts. It also offers ‘megatrend’ ETFs focusing on long-term innovation in various industries.  

• It’s a well-known company with a global reach: If you’re looking for a well-known name, BlackRock is one of them. They have a global reach, so you can access a range of investment options that may not be available elsewhere.  

• It caters to both institutional and retail clients: Many investment platforms only cater to retail investors or institutional ones, so this shows how adaptable BlackRock is.  

Cons of BlackRock  

• Higher fees for active management options: Higher fees can eat into your long-term returns, so it’s always worth considering if the charges are worth paying.  

• Its stance on ESG: While BlackRock does offer ESG investment options, it has come under scrutiny recently. For example, BlackRock supported only 4% of shareholder proposals on environmental and social issues this year, down from 47% in 2021. 

Pros of Vanguard 

• It has very low fees, especially for passive funds: This is a huge positive for investors, especially those who are starting and don’t want to pay high fees.  

• It’s ideal for long-term investors and beginners: Vanguard is suitable for those who want to buy and hold a fund instead of having to revisit their strategy regularly, such as DIY or active investors.  

Cons of Vanguard 

• It’s less ideal for active traders who need advanced trading tools: If you’re interested in additional tools and research to guide your investment strategy, Vanguard may not be the best fit.  

• ESG criticism: While you can invest in ESG funds via Vanguard, it did reject all 400 ERSG shareholder proposals during the 2024 proxy year. 

Vanguard or BlackRock: which should I choose? 

Choosing between Vanguard and. BlackRock depends on your investment needs, risk tolerance, and what type of investor you are.  

Beginners looking for simple, low-cost investments may find Vanguard’s low fees appealing. For more experienced investors, BlackRock offers a broader range of investment options, including active strategies and higher-risk portfolios. 

As well as fees, investment strategy, and various pros and cons, here are some other questions you should ask yourself when choosing between Vanguard and BlackRock. 

Can you have an account with both Vanguard and BlackRock?  

Yes, you can have accounts with both companies, but it’s important to consider tax implications and the additional administrative complexity of managing multiple accounts. 

Get expert financial advice 

Vanguard and BlackRock offer unique strengths, depending on your investment goals and risk tolerance. 

Vanguard's low-cost, passive strategies are great for long-term, hands-off investors, while BlackRock's active and diverse portfolio options appeal to those seeking more control. 

Your choice should reflect your investment approach, fees, and the service you need. 

Let Unbiased match you with a qualified financial adviser who can offer personalised guidance tailored to your investment goals and circumstances.