Vanguard founder Jack Bogle says the Pennsylvania-based company will overtake BlackRock as the world's largest asset manager, criticising the US rival for what he believes is an over-reliance on exchange traded funds.

The 88-year-old investment legend, who founded Vanguard in 1975 but no longer works with the company, said BlackRock had made itself vulnerable to being surpassed because of its dependence on ETFs, which he said pose a greater threat to the global economy than traditional funds and encourage short-term trading.