Vanguard Utterly Dominates Q1 ETF Flows

April 01, 2014

The house that Bogle built crushed its competition with massive first-quarter ETF inflows.

Vanguard, the fund company created four decades ago around the idea of cheap and efficient index funds, utterly dominated ETF gathering in the first quarter, pulling in upward of 90 percent of the more than $15 billion that investors poured into U.S.-listed ETFs in the first three months of the year.

Between those flows and the S&P 500 Index’s 1.81 percent rise in the quarter, ETF assets rose to $1.736 trillion—up 2 percent from the end of the last year and up almost 20 percent from the end of 2013’s first quarter, according to data compiled by ETF.com Analytics.

Despite’s Vanguard’s impressive inflows, net equity flows were shy of $2 billion and were actually negative for U.S. equities—a fact that reflects the “risk off” flavor in markets that prevailed for much of the beginning of first quarter. While flows into bonds were in excess of $11 billion, the 10 most popular ETFs of the quarter were focused on equities, save for two.

That small equity-inflows figure explains why first-quarter net inflows amounted to just 28 percent of year-earlier net inflows of $54 billion. That huge number in the 2013 first quarter was linked to about $49 billion of inflows into equities. It seems fair to say that unless inflows kick into high gear, last year’s record ETF inflows of more than $188 billion won’t be matched this year.

Vanguard’s asset haul totaled almost $13 billion, and included large inflows into a number of its already-large ETFs, including two focused on Europe. Europe is an investment destination that has turned decidedly rewarding since July 2012, when European Central Bank President Mario Draghi made clear that the ECB would play the crucial role of lender of last resort for the debt-plagued eurozone.

More broadly, Vanguard’s continued success at marketing its “pure beta” capitalization-weighted index strategies will no doubt create additional pressures on an ETF industry already intensely focused on keeping costs low. Vanguard is owned by its fund holders, and expense ratios on its funds drop as a matter of course as long as assets grow, which they clearly do.

There’s little doubt at this point that the Malvern, Pa.-based firm founded by fund industry legend John Bogle is close to moving up one notch to the No. 2 spot on ETF.com’s League Table. Vanguard has total ETF assets of $351 billion, compared with $379 billion for State Street Global Advisors, currently the second-biggest ETF company in the world.

SSgA suffered outflows of more than $18 billion in the first quarter. Just about all of SSgA’s outflows were from the SPDR S&P 500 ETF (SPY | A-98), the world’s oldest and biggest ETF—and, by far, its most heavily traded.

Vanguard ETFs Among Top 3

As noted, some of Vanguard’s most popular funds were spread all over the top 10 ETFs table in the first quarter. Those funds, their inflows and their assets were as follows:

  • Vanguard FTSE Europe ETF (VGK | B-94), inflows of $2.0 billion; total assets of $15.8 billion
  • Vanguard REIT ETF (VNQ | A-88), inflows of $1.9 billion; total assets of $21.0 billion
  • Vanguard FTSE Developed Markets ETF (VEA), inflows of $1.8 billion; total assets of $20.8 billion

Even the company’s big aggregate bond fund, the Vanguard Total Market Bond ETF (BND) made it onto the top 10 list, hauling in $1.5 billion, ending the quarter with $19.38 billion. Again, net inflows into fixed-income strategies totaled more than $11 billion in the quarter.

First Trust’s Big Quarter

First Trust, the company behind the large and successful Internet-focused ETF, the First Trust Dow Jones Internet Fund (FDN | A-97), had the most impressive quarter on a percentage basis.

It pulled in $3.68 billion in the first quarter, and its total assets rose to almost $24 billion—a more than 15 percent jump on the quarter.

Also, Guggenheim Partners’ ETF assets jumped by almost 10 percent in the quarter. It had net inflows of $2.32 billion, and it ended the quarter with $20.89 billion.

 


 

Q1 2014 Flows By Asset Class    
  Net Flows ($M) AUM ($M) % of AUM
U.S. Equity -967.87 945,073.66 -0.10%
International Equity 2,657.86 408,833.05 0.65%
U.S. Fixed Income 10,751.31 242,566.06 4.43%
International Fixed Income 494.26 21,615.70 2.29%
Commodities 115.47 67,061.43 0.17%
Currency -715.88 1,870.57 -38.27%
Leveraged -8.53 21,512.72 -0.04%
Inverse 2,866.10 20,376.93 14.07%
Asset Allocation 304.83 4,240.14 7.19%
Alternatives -100.98 3,051.10 -3.31%
Total: 15,396.58 1,736,201.36 0.89%
Q1 2014 Top Gainers        
Ticker Fund Issuer Flows AUM ($M) Turnover
VGK Vanguard FTSE Europe Vanguard 2,025.97 15,817.31 17,636.97
VNQ Vanguard REIT Vanguard 1,895.31 21,004.99 16,637.23
VEA Vanguard FTSE Developed Markets Vanguard 1,862.42 20,802.14 8,949.00
EZU iShares MSCI EMU BlackRock 1,680.75 10,278.14 10,604.54
VTI Vanguard Total Stock Market Vanguard 1,643.53 41,449.26 19,794.41
UWM ProShares Ultra Russell 2000 ProShares 1,636.66 1,801.23 3,799.85
VOO Vanguard S&P 500 Vanguard 1,525.33 16,703.19 13,589.57
BND Vanguard Total Bond Market Vanguard 1,496.82 19,381.39 11,236.57
CSJ iShares 1-3 Year Credit Bond BlackRock 1,420.19 13,245.73 5,268.23
XLF Financial Select SPDR SSgA 1,254.25 18,693.25 63,563.33

 

Q1 2014 Biggest Losers        
Ticker Fund Issuer Flows AUM ($M) Turnover
SPY SPDR S&P 500 SSgA -18,927.08 157,180.26 1,422,616.93
EEM iShares MSCI Emerging Markets BlackRock -7,481.18 31,884.49 195,348.66
VWO Vanguard FTSE Emerging Markets Vanguard -3,673.81 42,393.07 49,741.60
IJH iShares Core S&P Mid-Cap BlackRock -2,473.16 20,641.12 11,973.22
HYG iShares iBoxx $ High Yield Corporate Bond BlackRock -2,003.17 13,223.29 25,484.20
XLY Consumer Discretionary Select SPDR SSgA -1,614.90 5,644.99 26,838.31
MVV ProShares Ultra MidCap 400 ProShares -1,476.21 159.50 2,890.35
XLP Consumer Staples Select SPDR SSgA -1,241.01 5,417.08 25,772.48
QQQ PowerShares QQQ Invesco PowerShares -1,233.53 43,936.97 216,772.44
MOO Market Vectors Agribusiness Van Eck -1,175.56 3,421.96 1,590.34
 

Q1 2014 League Table        
Issuer Net Flows AUM ($M) % of AUM Turnover
BlackRock 4,549.10 673,151.07 0.68% 1,310,771.87
SSgA -18,159.72 379,578.11 -4.78% 2,034,873.82
Vanguard 12,998.37 351,156.50 3.70% 203,385.96
Invesco PowerShares 1,481.80 99,936.62 1.48% 250,507.45
WisdomTree -515.46 33,849.63 -1.52% 35,522.41
ProShares 1,503.78 27,395.33 5.49% 260,374.54
Guggenheim 2,317.74 24,378.13 9.51% 20,899.32
First Trust 3,684.39 23,949.29 15.38% 18,728.49
Van Eck 303.58 23,432.13 1.30% 102,971.69
Charles Schwab 1,804.82 19,012.43 9.49% 8,806.64
PIMCO 1,219.42 14,607.70 8.35% 8,984.02
ALPS 510.58 9,252.72 5.52% 4,083.55
Barclays Capital -472.15 8,115.15 -5.82% 109,996.99
Northern Trust 779.99 7,613.55 10.24% 1,750.79
Direxion 428.72 7,253.61 5.91% 151,419.61
JPMorgan - 5,887.31 0.00% 1,796.63
UBS 331.35 4,401.12 7.53% 2,091.51
Global X 489.84 3,390.41 14.45% 3,059.96
ETF Securities -145.74 2,976.50 -4.90% 1,440.25
US Commodity Funds -341.17 1,974.39 -17.28% 35,709.62
VelocityShares 718.48 1,720.48 41.76% 43,900.27
AdvisorShares 495.17 1,557.80 31.79% 1,461.37
Emerging Global Shares -38.52 1,469.96 -2.62% 859.76
Deutsche Bank 312.87 1,347.55 23.22% 1,264.40
Merrill Lynch 24.50 1,326.94 1.85% 482.36
Exchange Traded Concepts 353.02 1,272.09 27.75% 607.32
Credit Suisse 90.77 1,078.12 8.42% 370.27
IndexIQ 60.39 988.72 6.11% 449.97
Fidelity 216.63 865.32 25.03% 982.90
RevenueShares 44.77 753.50 5.94% 307.10
RBS Securities 75.31 618.37 12.18% 276.39
GreenHaven -1.68 348.18 -0.48% 146.76
Cambria 55.61 271.76 20.46% 169.39
Goldman Sachs - 258.35 0.00% 54.75
Teucrium 78.19 158.90 49.21% 524.08
Highland Capital Management 21.84 149.25 14.63% 78.56
Precidian -8.11 120.17 -6.75% 535.00
Arrow Investment Advisors 19.56 111.93 17.47% 122.60
KraneShares 66.58 91.96 72.40% 247.46
Jefferies - 68.20 0.00% 11.13
Morgan Stanley - 63.78 0.00% 33.11
CitiGroup 27.69 56.55 48.96% 27.97
Horizons 5.30 36.56 14.50% 49.56
Columbia 4.28 34.08 12.57% 31.62
Huntington Strategy Shares 0.84 31.03 2.69% 1,199.06
Russell -1.72 8.98 -19.13% 20.88
FFCM - 6.84 0.00% 17.45
LocalShares - 6.72 0.00% 46.80
Factor Advisor 4.01 4.92 81.52% 18.07
Pax World - - - -

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