ETF sales have been supporting Vanguard’s business this year amid sizeable outflows from its mutual funds range, new data show.
The asset manager’s $1.3tn ETF line attracted $113bn in net inflows in the year to the end of August, while its $4.4tn in long-term mutual funds bled $41bn, according to data from Morningstar. At Vanguard, ETFs are share classes of their mutual funds.
Vanguard remains the industry’s best-seller for the month, hauling in $7.3bn in long-term fund inflows in August, nearly 40 per cent more than its closest competitor. But the company would have suffered net outflows for the month were it not for ETFs, which garnered $13bn in new cash. Its mutual funds, meanwhile, lost $6bn.
The bleeding was heaviest among Vanguard’s domestic equity funds, which had $21bn in outflows during August. Its $974bn Total Stock Market index ranked as the month’s worst seller, with $9.7bn in net redemptions, followed by its $597bn 500 index, which had outflows of $3.5bn.
US equity funds struggled across the board in August, recording $52bn in outflows, Morningstar’s report shows. Taxable bond funds, meanwhile, were the favoured asset class, drawing $77bn in new cash.
Across asset classes, long-term funds took in a net $41bn in August, marking the fifth straight month of inflows.
Taxable bond funds gave JPMorgan Asset Management the industry’s second-best total for August, with inflows of nearly $5.3bn. More than 80 per cent of those flows derived from taxable bond products. Especially popular were the manager’s short-term bond funds: the $16.1bn Managed Income, the $4.9bn Short Duration and the $14.2bn Ultra-Short Income ETF.
Vanguard’s biggest competitor in the ETF space, iShares, garnered $5bn in new cash, followed by State Street Global Advisors with $2.7bn, Invesco with $2.1bn and Pimco with $1.9bn.
T Rowe Price, meanwhile, suffered the steepest outflows, with $3.7bn gushing from its long-term funds. More than 60 per cent of the outflows were from just two funds — the $66bn Growth Stock and the $33bn New Horizons — despite strong investment performance by both this year.
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