Why Vanguard is Leading ETF Inflows for 2012
May 21st 2012 at 2:09pm by John Spence
Vanguard has a huge lead in exchange traded fund sales so far in 2012 as the firm best known for its index funds continues to focus on core-holding ETFs and very low fees.
One of every three dollars invested in mutual funds and ETFs through the first four months of the year went to Vanguard, reports Jason Kephart at InvestmentNews.
Year to date through the end of April in the ETF business, Vanguard had gathered $21.6 billion so far in 2012, while BlackRock’s iShares collected $13.3 billion and State Street added $7.2 billion, according to data from the ETF Industry Association.
“Vanguard collected $4.4 billion in April, which was four times more than the next closest provider and nearly twice as much as the rest of the industry combined. The company’s ETF offerings last experienced a monthly outflow in February 2003,” says investment researcher Morningstar. [Vanguard, Bond Funds Dominating ETF Flows]
Vanguard’s best-selling funds are designed as core holdings that capture large chunks of the market such as the $20 billion Vanguard Total Stock Market ETF (NYSEArca: VTI) and the $16 billion Vanguard Total Bond Market ETF (NYSEArca: BND), InvestmentNews reports.
VTI has an expense ratio of 0.06%, while BND charges 0.1%.
“The core is where you have the majority of assets, and that’s where investors are expecting the lowest-possible-cost products,” said Martha King, managing director of Vanguard’s financial advisory services division, in the article.
“Costs matter more when expected returns are low. If you’re expecting only a 2% or 3% return, a 1% fee seems a lot more expensive,” added Mike Rawson, an ETF analyst at Morningstar.
Vanguard Total Stock Market ETF
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