Believe It: A Vanguard ETF Bleeding Assets

When it comes to Vanguard and exchange-traded funds' assets, the trajectory, more often than not, is up. Over the past several years, Vanguard has usually been no worse than the second-best asset gatherer in the ETF business. The Pennsylvania-based company ascended to being the second-largest U.S. ETF sponsor behind BlackRock, Inc. BLK's iShares unit.

So strong is Vanguard's ETF asset-gathering acumen that it is almost difficult to fathom one of its fund's losing money. However, that is the recent plight of the Vanguard Extended Market ETF VXF.

What Happened Here?

As StreetOne Financial Vice President Paul Weisbruch pointed out, investors have yanked nearly $1 billion from VXF over the past month, a considerable sum give the ETF's $4.1 billion in assets under management at the end of July. Weisbruch also pointed out that selling in VXF has been marked by some days with unusually large volume in the fund.

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To be fair, unusual volume in an ETF, good or bad, is not the telltale sign investors believe it to be with individual stocks. An ETF can see unusually large turnover for one or two days simply because big investors are buying the fund. Then the volume returns to normal until those investors decide to depart the ETF question.

It is just speculation, but that could be what happened with VXF over the past month. An ETF strategist or institutional investor may have decided there are more compelling opportunities and decided to raise some cash by departing VXF. That does not mean the ETF, which is up 8.7 percent year-to-date, is about to enter a new bear market.

A Little More Info

VXF is a mid-cap blend ETF that attempts to provide “a convenient way to match the performance of virtually all regularly traded U.S. stocks except those in the S&P 500 Index,” according to Vanguard.

With an annual expense ratio of a scant 0.09 percent, VXF is less expensive than 92 percent of rival funds, according to issuer data.

“VXF is compared to the Wilshire 4500 Index in terms of a comparable benchmark, and we see that the fund currently owns three thousand two hundred fifty-five individual stocks presently, giving it clearly broad diversification,” noted Weisbruch.

Financials account for over a quarter of the ETF's weight, while technology and consumer discretionary combine for nearly a third of the lineup. VXF is up 24.6 percent over the past three years.

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