The world of low-cost investing is dominated by a few very large investment managers globally. Blackrock’s iShares and Vanguard are two of these cost leaders that also have a significant presence in the Canadian market.
Blackrock, as of October 2022, had just under $8 trillion US dollars in assets under management while Vanguard’s assets under management have also fluctuated around the $8 trillion US dollar mark throughout 2022.
In this comparison, I will compare iShares and Vanguard’s Canadian offering across the following categories:
- Product selection
- Asset allocation portfolios
- Reputation in Canada
I will cover iShares vs Vanguard Canada below to see who comes out on top among the two asset management juggernauts.
Both Blackrock and Vanguard are US companies, having expanded into Canada after finding success managing investments within the US.
Between the two, Blackrock’s iShares was the first to expand into Canada, having launched the first bond ETF globally in Canada in 2000. Vanguard’s expansion into Canada came at a much later date, with the launch of six passive ETFs in Canada back in 2011.
Given iShares’ head start here in Canada, it has managed to attract much more capital across its funds than Vanguard. Blackrock is currently managing over $275 billion in assets here in Canada while Vanguard was only managing $46 billion in assets within Canada (as of September 30, 2022).
When looking at product selection for both iShares and Vanguard in Canada, I will consider the ETF lineup exclusively from each company.
iShares currently has an incredibly diverse ETF lineup in Canada, with 161 different ETFs currently available for Canadians to purchase. This includes a broad range of ETFs, including equity ETFs, all-in-one ETFs, bond ETFs, thematic ETFs, and more. More specifically, iShares currently offers:
- Six commodity ETFs
- 101 equity ETFs
- 41 fixed-income ETFs
- 11 multi-asset ETFs
- Two real estate ETFs
Vanguard has a much tighter ETF shelf here in Canada than iShares, currently offering only 37 different ETFs for Canadians to purchase. The ETF diversity is lower, although Vanguard also offers equity ETFs, all-in-one ETFs, bond ETFs, and more. Vanguard currently offers Canadians the following:
- 22 equity ETFs
- Nine fixed-income ETFs
- Six asset allocation ETFs
The very large head start that iShares has had in the Canadian market has allowed the company to build a much wider product range for Canadians than Vanguard. iShares’ funds also typically come with longer performance track records.
Product selection verdict – With regard to product selection here in Canada, iShare’s ETF lineup is many times larger and more diverse than Vanguard’s, making iShares the clear winner in this category.
Both iShares and Vanguard position themselves as low-cost asset managers around the world. This applies to their product offering in Canada as well.
An ETF with lower total fees will allow you to compound your wealth faster over time.
When looking at similar investment mandates from both iShares and Vanguard in Canada, each company offers more inexpensive funds in different categories. I will look at a few specific examples below.
S&P 500 Index ETF
Both Vanguard and iShares offer an unhedged S&P 500 Index ETF in Canada. This is the VFV ETF for Vanguard and the XUS ETF from iShares. The VFV ETF is offered at a management expense ratio of 0.09%, while the XUS ETF is offered at a management expense ratio of 0.10%.
Make sure to read my guide on the best S&P 500 ETFs in Canada.
All-In-One ETF Suite
iShares and Vanguard also both offer all-in-one ETF suites. These are one-ticket solutions that allow you to access a diversified portfolio of underlying ETFs by purchasing only one fund.
Both Vanguard’s suite and iShares’ suite are complete, meaning that they offer solutions for investors of various risk tolerance levels.
Regarding the all-in-one ETF suites, iShares offers its different portfolios at a management expense ratio of 0.20%. Vanguard has a more expensive all-in-one suite, with ETFs being offered at an MER of 0.24%.
Since both Vanguard and iShares have different areas where one is able to offer funds at lower fees than the other, it is difficult to crown an overall winner when it comes to fees.
Depending on the type of ETFs that you are looking to purchase, you will want to research solutions from both to see which company offers the more inexpensive fund.
Fees verdict – With each company shining in different fund categories when it comes to lower fees, it is a tie between both Vanguard and iShares when it comes to the cost of each company’s funds.
Asset allocation portfolios are a popular ETF choice for a lot of investors that are looking for an extremely simple way to invest their money. Usually containing several underlying ETFs, purchasing an all-in-one ETF essentially takes care of your whole invested amount.
As mentioned before, both iShares and Vanguard offer asset allocation portfolios here in Canada.
Vanguard’s asset allocation lineup includes
- VCIP – Vanguard Conservative Income ETF Portfolio
- VCNS – Vanguard Conservative ETF Portfolio
- VBAL – Vanguard Balanced ETF Portfolio
- VGRO – Vanguard Growth ETF Portfolio
- VEQT – Vanguard All-Equity ETF Portfolio
- VRIF – Vanguard Retirement Income ETF Portfolio
iShares’ asset allocation lineup includes:
- XINC – iShares Core Income Balanced ETF Portfolio
- XCNS – iShares Core Conservative Balanced ETF Portfolio
- XBAL – iShares Core Balanced ETF Portfolio
- XGRO – iShare Core Growth ETF Portfolio
- XEQT – iShares Core Equity ETF Portfolio
Although the options are very similar for both iShares and Vanguard, the iShares all-in-one suite is offered at a lower management expense ratio of 0.20% (versus Vanguard’s typical 0.24% fee for most portfolios).
Asset allocation portfolio verdict – Vanguard and iShares both offer complete all-in-one ETF suites in Canada, but iShares is able to offer very similar portfolios at a lower management expense ratio for Canadians, making it the winner in the asset allocation portfolio category.
Vanguard and Blackrock are fairly equal when it comes to their reputation across the US and globally. In terms of assets under management, both companies are constantly fighting over the number one spot in the world.
Looking at their reputations in Canada more specifically, both companies are well-known here as well. Vanguard may be considered slightly less well-known to the average Canadian because of the company’s later entrance into the Canadian investing space.
Although reputation is difficult to quantify with an exact number, it is safe to say that iShares is more well-known and likely has a better reputation in Canada because:
- Blackrock entered the Canadian investing space more than a decade earlier than Vanguard
- iShares currently has a much wider product offering in Canada
- iShares currently has substantially more assets under management in Canada
- Several iShares ETFs are priced lower than Vanguard funds, making them more attractive
Reputation in Canada – although both Vanguard and Blackrock’s iShares ETF suite are both exceptionally well-known around the world, Blackrock’s early initiative within Canada has caused it to lead Vanguard across a lot of metrics, making it the winner in the reputation category.
Frequently Asked Questions
When it comes to the most basic, currency-unhedged version of an S&P 500 Index ETF from both Vanguard and iShares, Vanguard comes out on top by offering its VFV ETF at a management expense ratio of 0.09% while iShares’ XUS ETF is priced at 0.10%.
Read my article on the best S&P 500 ETFs in Canada for more information on both, as well as several other options.
Best All-In-One ETF in Canada?
When it comes to all-in-one ETF suites in Canada, iShares comes out on top due to its lower fees across most equivalent portfolios (relative to Vanguard).
Keep in mind that other investment managers also offer all-in-one ETF suites here in Canada. Also positioned as low-cost, one-ticket solutions, both BMO and Horizons offer excellent all-in-one ETF suites in Canada.
Although Vanguard and iShares are constantly fighting for the top spot as asset managers with the highest amount of assets under management, Fidelity Investments is currently in third place by assets.
Fidelity also offers a broad range of ETFs and mutual funds here in Canada. These funds are typically slightly more expensive than similar strategies that may be offered by Vanguard, iShares, or other low-cost investment providers in Canada.
Our Final Verdict
Both Vanguard and iShares are top options when it comes to low-cost investment solutions, namely ETFs. Although the competition is much fiercer in the US, iShares’ early expansion into Canada has allowed it to gain a huge edge over Vanguard over the past several years.
Due to a much wider product selection, stronger reputation, and slightly cheaper all-in-one ETF portfolios, iShares is the winner when it comes to its presence here in Canada.
Despite iShares coming out on top, there are certain situations in which you may prefer to consider one asset manager over the other
Consider iShares’ Canadian lineup if:
- You are looking for a large variety of ETFs across different asset classes
- You prefer investing in ETFs with very long performance track records
- You are looking for relatively cheaper all-in-one ETF portfolios
Consider Vanguard’s Canadian lineup if:
- You are looking for more specific funds that may be offered more cheaply by Vanguard (i.e. an S&P 500 Index ETF)
- You are looking for an all-in-one retirement income portfolio (which iShares does not currently offer)
Keep in mind that other low-cost ETF providers exist in Canada as well, along with Vanguard and Blackrock’s iShares. Other key players include BMO, Horizons, Invesco, and TD.
If you are looking for a very specific investment mandate, you may be able to find it at an even lower management expense ratio than other asset managers.
If you are looking for a comprehensive list of excellent funds to choose from, make sure to read my guide on the Best ETFs in Canada.