The ETF industry is growing rapidly with the three largest providers, BlackRock (BLK – Free Report), Vanguard and State Street, dominating the United States market.
In particular, Vanguard has become extremely bigger than what it was eight years ago. This is especially true as Vanguard’s total assets under management more than quadrupled to $4.8 trillion from $1.1 trillion in 2009. The passively managed funds accounted for 91% of inflows through the first 10 months of this year compared with 78% in 2009.
Net flows into Vanguard funds so far this year accounted for about 51% of total net flows into all U.S. mutual funds and ETFs, according to Morningstar. The money management giant pulled in nearly $300 billion new cash in the first nine months and is on track to collect a record $350 billion this year. The explosive growth was driven by investors’ drive for low-cost passively managed funds, which directly track the performance of indexes.
That said, we have highlighted five popular Vanguard ETFs that have been embraced by investors this year and will continue to grow in the months ahead.
Vanguard FTSE Developed Markets ETF (VEA – Free Report)
This fund offers exposure to stocks in the developed market by tracking FTSE Developed All Cap ex US Index. It has accumulated around $16.2 billion in capital so far this year, propelling its AUM to $65.2 billion. The ETF holds a broad basket of 3850 stock with none accounting for more than 1.4% of assets. It charges just 7 bps in fees per year and trades in a heavy volume of 7.2 million shares on average. The fund has gained 22.9% this year and carries a Zacks ETF Rank #2 (Buy) with a Low risk outlook.
Vanguard S&P 500 (VOO – Free Report)
VOO have gathered nearly $13.3 billion in its asset base this year. This has taken the fund’s total AUM to $79 billion. The ETF tracks the S&P 500 index, and holds 507 stocks in its basket with each accounting for less than 4% of assets. It is slightly tilted toward information technology with one-fourth share, while financials, healthcare, consumer discretionary and industrials make up for a double-digit allocation each. It is a low-cost choice in the space, charging only 4 bps in fees per year and trades in solid volume of 1.8 million shares a day. It has returned 17.4% this year and holds a Zacks ETF Rank #2 with a Medium risk outlook.
