Vanguard was a relative latecomer to the exchange traded fund (ETF) industry, launching its first fund in 2001. But the firm has since become the third-largest ETF provider, thanks in part to low fees.
Vanguard Group Inc. is already the largest U.S. stock and bond mutual fund manager, and now the firm has set out to conquer the ETF industry, one sector at a time. Charles Stein for Bloomberg reports that Vanguard is the third-largest sponsor of ETFs, and has captured more than 30% of the money flowing into the business this year by charging an average fee of 0.15%; the industry average is 0.54%.
Vanguard now has $77 billion in ETFs, after inflows of $17.8 billion this year. The firm’s share of the market rose to 11%, up from 8.5% at the end of last year. (How to choose ETFs).
Their strategy of charging the lowest in fees is garnering the interest of many investors who are educated on the possibility that fees can cut into principal and earnings. (What else is important when selecting ETFs?).
But Vanguard has something else interesting at play: the firm’s founder, John Bogle, has been vocal in his criticism of ETFs. His chief complaint is that they encourage short-term trading. Bogle stepped down as Vanguard’s CEO in 1996.
For more stories about ETFs, visit our ETF 101 category. Among Vanguard’s lineup of funds include:
- Vanguard Emerging Markets ETF (NYSEArca: VWO): up 68.6% year-to-date
- Vanguard Europe Pacific ETF (NYSEArca: VEA): up 25.3% year-to-date
- Vanguard REIT Index ETF (NYSEArca: VNQ): up 15.4% year-to-date