This Big ETF Keeps Getting Bigger

Investors love their exchange-traded funds big, and they love them cheap. Predictably, those themes are benefiting Vanguard, the second-largest U.S. ETF issuer. Most of Vanguard's ETFs are large and nearly of those funds can be considered cheap.

The Vanguard Total Stock Market ETF VTI fits the bill as large and inexpensive. Year to date, a significant percentage of broader ETF industry inflows have been directed to funds charging less than a third of a percent per year and a big chunk of those dollars are heading to ETFs with annual fees of less than 0.11 percent, or $11 on a $10,000 investment.

VTI is the third-largest ETF in the U.S., trailing only the SPDR S&P 500 ETF SPY and the iShares Core S&P 500 ETF IVV. SPY and IVV are the only ETFs in the world with $100 billion or more in assets under management.

On The Right Track

With $84.3 billion in assets under management at the end of August, VTI still has a ways to go to join the $100 billion club, but the ETF is undoubtedly on the right track.

VTI “has sported an impressive October thus far in reeling in over $500 million in assets while competing ETF from iShares, the iShares Core S&P Total U.S. Stock Market ETF ITOT, has fared well itself this month (>$380 million in),” said Street One Financial vice president Paul Weisbruch in a note out Monday. 

To be precise, VTI has added $568.6 million in new assets since the start of the fourth quarter, a total exceeded by just nine other ETFs.

Big Flows, Big Roster

Year to date, investors have added $6.42 billion in new assets to VTI, putting it just outside the top 10 asset-gathering ETFs. ITOT has seen inflows of $4.35 billion.

“One fact that cannot be overlooked when it comes to these two ETFs is the reality that they are also dirt cheap in terms of their expense ratios and among the lowest cost ETFs in the U.S. ETF universe period,” said Weisbruch. “As many in the industry, especially when concerning institutional investors and plans that have not traditionally invested in ETFs, have commented in the past couple years, there is an active search for 'the lowest cost exposure' in many asset segments so these asset flow trends are not surprising.”

VTI has a massive roster of nearly 3,630 stocks and charges just 0.04 percent per year, or $4 on a $10,000 investment, making it cheaper than 96 percent of competing funds, according to issuer data. 

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