Pandemic Backdrop: “Let there be Growth!”

Vanguard Canada is Canada’s 3rd largest (and sole independent one amongst the largest 3) ETF providers.

As of the end of April 30, 2021, AUM across the firm’s ETF offered aggregates to slightly over CAD 38 Billion, up from marginally over CAD 25 Billion as of 12 months ago, an increase overall of 51.6%.

In my estimation, going back to December 2019 to get a sense of asset growth and contribution thereto, AUM rose some CAD 13.2 Billion, with net inflows through January 2020 all the way to April 2021 aggregating to CAD 9.5 Billion, for a 71.7% contribution to AUM growth. The remainder (28.3%) consisting of overall market gains in the respective ETFs comprising Vanguard’s offering (+CAD 3.78 Billion).

Here is the month-to-month picture showing monthly net creations and performance contribution going back to Jan 2020:

Looking strictly at net creations (Inflows), here is what the month-to-month experience of the past 16 months or so look like:

While last month’s net creations marked a slight pullback from the past couple of month’s experience (around CAD 1.2 Billion for Jan, Feb, and March), the more relevant takeaway in my book, is that pandemic or not, the pace of net creations has significantly picked up from a year-ago level.

Specifically, for the months of Jan-Apr 2021, creation levels are estimated to have amounted to CAD 2.4 per CAD 1.00 incoming over the same period in 2020.

 

Where is the money?

Here is the breakdown (Bonds Equities / Asset Allocation ETFs) as of April 30, 2020, respectively 2021:

Specifically, since the above doesn’t display AUM, we have CAD 6.249 Bio of Bonds AUM going to CAD 7.284 Bio.

As well as CAD 15.822 Billion of equities AUM going to CAD 24.676 Billion and CAD 3.008 Billion of Asset Allocation AUM going to CAD 6.053 Billion (for respective growth rates y/o/y of +16.6%; 56%; and 101.2%.

Bottom line: 

Vanguard asset allocation ETFs continue to enjoy significant success with Canadians; AUM growth has mostly favoured Equities ETFs at Vanguard, suggesting investors and their advisors have made use of the firm’s offering to position for a rebound, respectively reopening; and perhaps more importantly, the pick up in the pace of net inflows suggests a ramped up propensity to use ETFs as a vehicle of choice for investing. All – IMO – positive developments for investors.

Oh … and yes, sorry, this does include some double-counting, in that the Asset Allocation ETFs make extensive (and exclusive) use of the firm’s own ETFs across asset class and geographies.