Vanguard ETFs (May 2021) – Impressive sales growth since Dec abates somewhat

Vanguard Canada’s AUM (ETFs) as at May 31, 2021 stands at an estimated CAD 39.2 Billion, up 23.5% from December 31, 2020, respectively 51.2% y/o/y. (Net inflows y/o/y represented 63.4% of AUM growth, the remaining 36.6% reflecting performance gains).

As noted recently, the pace of AUM growth at Vanguard has picked up notably, beginning last December, with monthly net inflows first reaching close to $1 Billion, and then topping the $1.2 Billion mark 2-3 months in a row, before retreating somewhat toward the current $1 Billion a month pace. For perspective, the average monthly net inflow level prior to December 2020 stood at some $350 MM between Jan and Nov 2020.

Impressively, this is all accomplished with a line-up of 37 ETFs, and without a lot of the “bells and whistles” deployed by other players (ESG, Covered Call Strategies; Actively managed; etc). And, for that matter, without the critical distribution leg that favors competitors such as BMO ETFs and RBC iShares ETFs.

Highlights:

  • Aggregate creations: +CAD 1.009 Billion; aggregate outflows: -CAD 38.9 MM (for net+CAD 970.25 MM).
  • AUM change from prior month: +CAD 1.2 Billion (implied performance contribution: +CAD 229.5 MM).
  • Value – despite being “en vogue” these days … VVL sustained $22.6 MM of redemption in May.
  • Asset Allocation solutions – saw net creations of some CAD175 MM in May.
  • Retirement, you say? From zero 9 months ago, the Retirement Portfolio (4% withdrawal target) is now nearing the CAD 1/2 Billion mark. The all-equity Portfolio, for its part, has seen AUM close to triple in that time span, and now total CAD 1.07 Billion, illustrating the great reception these “all-in-one solutions” have received.
  • Bullish/Bearish – with the vast majority of new creations/net inflows headed for equity-based solutions (+CAD 734 MM for May, excluding the Asset Allocation segment), arguably flows continue to have a bullish outlook.

Performance-wise:

May 2021: top and bottom 10 performing Vanguard Canada ETFs:

YTD (May) 2021: top and bottom 10 performing Vanguard Canada ETFs:

Noteworthy:

  • Leading the performance derby – Canada; Dividend; Value = all doing well (Banks … have a lot to do with that …)
  • Bonds – some modicum of normalcy returns … (would be careful in the area, preferring Ladders; FRNs to pure benchmark exposure in terms of positioning for potential further rates level “normalization” with all the risks that entail for markets and the economy more broadly)
  • Home-bias – Canadians’ traditional extreme home-bias beneficial, for once … THAT – however … IMO not to say that diversifying away from it not sensible – all be it that for the moment I’d continue to ride the domestic market outperformance, on the basis of the cyclicality of domestic market benefitting from reopening …