Vanguard vs BlackRock: what’s the difference?

1 min readLast updated December 5, 2023by Rachel Carey

This article examines the differences, fees, pros and cons, and other aspects of Vanguard vs Blackrock.

Summary 

  • Vanguard and BlackRock are the world’s largest investment firms. 

  • Vanguard focuses more on passive options, and BlackRock offers a number of strategies. 

  • Vanguard and BlackRock both have unique and very different fee structures. 

  • Consider the fee structures, services, and investment options to make the best choice. 

  • A financial advisor can help you decide which option is best. 

Vanguard vs BlackRock: what’s the difference?  

When your choice of investing options comes down to Vanguard vs BlackRock, you know it’s a tight race to the finish. Both firms are dynamos in the industry, especially where exchange-traded funds (ETFs) or index funds are concerned.  

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.  

What fees can I expect from Vanguard and BlackRock?  

Both Vanguard and BlackRock deviate from the four main types of fees charged by most investment firms and online trading platforms. Most firms and platforms charge the following types of fees:

  • Trading fees: These fees are usually a fixed charge attached to the trades you make and are either flat fees or are based on the difference between the asset’s buying and selling price. 

  • Trading commissions: These fees are based on a percentage of the volume or value of each of your trades. 

  • Inactivity fees: These fees are charged if you do not trade but hold assets or keep money in your brokerage account instead. 

  • Non-trading/other fees: These fees are not covered by any of the categories above and are associated with additional services or functions such as making deposits or withdrawals. 

Let’s take a closer look at BlackRock and Vanguard’s fees.  

Vanguard has a competitive fee structure based mostly on trading. The firm offers $0 stocks and ETF trading, and 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. There are reduced-price options 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 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, growing 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 BlackRock or Vanguard better? 

BlackRock and Vanguard Holdings are similar in that they are both investment companies. However, their offerings and model are decidedly different. Take the pros and cons of both firms into account when deciding which one would be best for you. 

Vanguard:

ProsCons
Wide selection of mutual funds Firm offers a basic trading platform only
Leader in low-cost funds Limited research and data
High interest rate for uninvested cash
Good order execution quality
Commission-free ETF, stock, and options trades

BlackRock:

ProsCons
Minimum account balance required High investment requirement for mutual funds
Financial advisors manage portfolios Firm faced overpopulation and earning revision challenges
Tax advantages in multiple states

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 research, build, and maintain your portfolio using data and research, 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 Vanguard and BlackRock? 

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 would 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 when it comes to Vanguard vs BlackRock. Being 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. 

Senior Content Writer

Rachel Carey

Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.