Vanguard, the third-largest U.S. issuer of exchange traded funds, is enjoying another stellar year of inflows as investors eschew high-fee, under-performing actively managed mutual funds in favor of lower cost, passively managed funds.
Investors have sent a whopping $163.4 billion into Vanguard ETFs and mutual funds through the end of October, topping the yearly record of $141 billion seen by the 39-year old Pennsylvania-based firm in 2012, reports Charles Stein for Bloomberg.
Last month, Vanguard added $24.5 billion, its second-best month of inflows on record. Year-to-date, investors have poured nearly $86 billion into Vanguard’s equity-based index funds while the firms stock ETFs have added $87.2 billion in assets, according to Bloomberg.
October’s flows to Vanguard ETFs are far from a new phenomenon. In the first quarter, the firm added $13.1 billion in new ETF assets, or nearly 90% of all new capital that flowed into U.S. ETFs during the first three months of the year. [Vanguard Leads ETF Inflows]
Vanguard ETFs are popular with investors due in part to robust liquidity and some of the lowest fees in the industry. Earlier this year, the company reduced expenses on five of its ETFs, including VWO. In April 2013, the firm lowered fees on seven ETFs, which followed 22 expense reductions in late 2012.[Vanguard Lowers Fees on Five ETFs]
However, Vanguard, unlike most of its rivals, eschews daily disclosure of its ETFs’ holdings, alleging that disclosing the funds’ components can subject investors to diminished returns. Vanguard’s ETF holdings are disclosed on a monthly basis with a 15-calendar-day delay.
To this point in the fourth quarter, two Vanguard ETFs – the Vanguard S&P 500 ETF (NYSEArca: VOO) and the Vanguard Total Stock Market ETF (NYSEArca: VTI) – rank among the top-10 ETFs in terms of assets gathered.
On a year-to-date basis, five of the top-10 U.S. ETFs for inflows are Vanguard funds. That quintet is comprised of, in order, VOO, VTI, the Vanguard Total Bond Market ETF (NYSEArca: BND), Vanguard FTSE Developed Markets ETF (NYSEArca: VEA) and the Vanguard REIT ETF (NYSEArca: VNQ).
For the fourth quarter, just one Vanguard ETF – the Vanguard FTSE Europe ETF (NYSEArca: VGK) – is among the 10 worst ETFs in terms of outflows.
Vanguard S&P 500 ETF
ETF Trends editorial team contributed to this post.