Rough September? (Indeed …)

Looking at month-end data for Vanguard Canada ETFs, Aggregate Assets under Management across the firm’s 37 ETFs reflects a decrease of CAD 446 MM for the month of September. Given net estimated issuance of $990M, this implies a negative market contribution of CAD 1.44 Billion for what is historically a punishing month for investors.

Asset allocation ETFs (6 of them in total) continue to make strong contributions to the firm’s inflows (25.8% of total for September), with “tilt” still very much to the “growth” side of the equation, seeing $ flowing to Growth, respectively all-equity ETF portfolios.

Similarly, as far as major beneficiaries of inflows for September, US equities and Canadian equities were by far the preferred destination, the other top inflow gatherer being VBU (US Aggregate Bonds ETF), which took in CAD 95MM. (S&P 500 took in CAD152MM; while US Total Market garnered CAD 101MM in inflows, and Canadian All Cap Equities CAD 83MM).

Modest outflows were seen in CAD hedged US Total Market; US Dividend Appreciation (hedged); and FTSE Developed all cap ex US).

*Note – evidently some double counting is present in these numbers, as inflows into Asset Allocation ETF solutions entail these in turn buying the ETFs comprising their portfolios (in proportion to what the allocation to each individual ETF is in these portfolio solutions).

Year-over-year, Vanguard’s AUM is up 56.4%. Inflows are estimated to have contributed 2/3 to that growth, the remainder being by definition market impact (CAD 5.76 Billion out of total AUM increase of CAD 15.8 Billion est y/o/y).

For the 12 months trailing, Asset Allocation ETFs have gathered 30% of inflows (not adjusting for any double-counting).

Here are the top and bottom 10 performers for the month of September 2021 – illustrating the fact that September actually wasn’t exactly kind to investors:

 

And here are the top and bottom 10 performing Vanguard ETFs Year-to-date (end of September 2021)

 

Big picture:

  • Bond ETFs producing negative returns for the first 9 months of 2021, with longer duration hit hardest
  • Dividend as a factor dominating vs say value, which in past 6 months has lagged dividends significantly, as well as trailed Global Momentum on a 6 months look back, but on the other hand, fared better in September
  • Min Vol underperformed both Global Value and Global Momentum in September … lagging both significantly on a YTD basis as well (will it fare better if September’s performance is prelude to a broader setback?)
  • Canadian REITs performance suggests … back to “Normal”?
  •  Canada is outperforming US
  • EM – vow: ZERO (ok 0.26%) returns year-to-date … Better days ahead? Or additional pain driven by … China? and possibly USD strength and rising rates (at some point?)