Vanguard pushed past the half-trillion mark in assets in actively managed bond funds for the first time in June, writes Matt Wirz for The Wall Street Journal.

The titan of low-cost funds has been expanding its active bond-fund selection for the last five years. This is creating a potential problem for its competitors – including BlackRock, Fidelity Investments, Pimco, and Western Asset Management – that have long dominated bond investing.

During that time, Vanguard expanded in areas such as emerging markets, short-term corporate debt, and pan-market, also known as “core bond” funds. And while most of its newer funds are small to midsize, they are growing rapidly thanks to the fees, which are much lower than those of its competitors.

Vanguard’s relatively recent push into active bond investing is also forcing other large asset managers to consider trimming their own profits to gain more customers.

“It took decades for it to happen on the index side, and Vanguard’s competitors are going to resist this but I think the direction, the gravitational pull, is for fees to come down,” said Jeffrey DeMaso, director of research at Adviser Investments.

Read more about Vanguard in The Wall Street Journal here.

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