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Nearly A Third of Vanguard's 2015 Flows Went Into Its ETFs

January 7, 2016 1:31 pm
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For decades, Vanguard was known as a mutual fund provider. More specifically, the Pennsylvania-based company was and still is known as the dominant provider of low-cost, passive, index-based strategies.

However, despite a somewhat late entry to the exchange-traded funds business, Vanguard has become a dominant ETF sponsor as well.

Vanguard: Breaking Records

The Wall Street Journal reported Vanguard hauled a mutual fund industry record $236 billion last year, easily topping the $214.5 billion the firm brought in 2014.

Related Link: Guess What? It’s Time For Bank ETFs

Vanguard, the second-largest U.S. ETF sponsor, was last year's number two asset gatherer, as the Vanguard 500 Index Fund (NYSE: VOO) and the Vanguard Total Stock Market ETF (NYSE: VTI) combined to add over $20 billion in new assets.

Overall, ETFs issued by Vanguard took in $76.4 billion in new assets last year, according to S&P Capital IQ.

Only BlackRock, Inc. (NYSE: BLK)’s iShares unit, the world's largest ETF issuer, added more new ETF assets last year than Vanguard did, and only iShares had a larger percentage of the top 10 asset-gathering ETFs in 2015 than Vanguard did.

Making Vanguard's 2015 asset-gathering pace all the more impressive is that its Vanguard Emerging Markets STock Index Fd (NYSE: VWO), the largest emerging markets ETF, lost more than $2.9 billion in cash, a total surpassed by just three other ETFs.

Additionally, the Vanguard Dividend Appreciation ETF (NYSE: VIG), the largest U.S. dividend ETF, bled more than $1 billion.

Flow Catalysts

Low fees continue to be a key driver of flows to Vanguard funds, including ETFs.

“Investors pay just under 18 cents per $100 invested in Vanguard products, according to Morningstar. That compares with $1.23 for the average actively managed fund and 89 cents for the average passive fund, according to Morningstar,” reported the Journal.

In December, Vanguard pared fees on 21 of its ETFs. That includes Vanguard's group of 10 sector ETFs. With the new, lower fees, Vanguard undercuts rival Fidelity as having the least expensive sector ETFs on the market today.

Also among the ETFs and mutual funds Vanguard lowered fees on were eight fixed income ETFs and three mega-cap style ETFs, including the Vanguard Mega Cap ETF (NYSE: MGC).

Image Credit: By William Cho (Stamford RoadUploaded by russavia) [CC BY-SA 2.0], via Wikimedia Commons

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