1) Thematic Investments Files for the B.A.D. ETF
SEC Filings | 9/27/2021
Because… We are highlighting the B.A.D. ETF this week because it shows how far a fund provider is willing to go in terms of attracting investor attention. We predict that the fund’s ticker symbol will be “BAD” too. We do not believe the ETF sponsor would consider its own fund bad, but the name is captivating enough to generate curiosity. The fund invests in betting or gambling companies, alcohol and cannabis companies, and/or pharmaceutical companies. Its market exposure is very similar to that of AdvisorShares Vice ETF (VICE), which selects companies operating in “vice” industries. The B.A.D. ETF, which tracks a rules-based index, has an expense ratio of 0.75%, 24 basis points lower than the fee of 0.99% charged by the actively managed VICE. Whether the B.A.D. ETF can accumulate more assets than VICE’s $12 million remains a question. At least, the newly filed ETF has a memorable fund name that investors will not forget.
2) Vanguard ETF Dethrones State Street for Biggest Annual Inflow
Bloomberg | 9/28/2021
Because… The news that YTD flows of $41.1 billion into Vanguard S&P 500 ETF (VOO) exceeded the 2008 record of $39.5 billion set by SPDR 500 ETF (SPY) is remarkable. The feat is especially extraordinary considering VOO’s average daily share volume of 4.1 million is much lower than SPY’s 67.4 million. This year through August, SPY only brought in $3.0 billion while VOO garnered $36.6 billion. The article also mentioned that Vanguard issued the next four ETFs with the most inflows this year. Vanguard already boasts two ETFs with more than $250 billion of assets: VOO ($250 billion as of September 29, 2021) and Vanguard Total Stock Market ETF ($265 billion). Replacing SPY to become the industry’s largest ETF in the future is not impossible based on the current pace of inflows. According to FactSet data, Vanguard raked in $231.1 billion in the first eight months of the year, accounting for 39% of the ETF industry’s total sales of $592.3 billion. Vanguard’s huge success proves again that investors favor the lowest-cost broad market-based ETFs.
3) Vanguard to Lower Investor Costs by an Estimated $190 Million through Enhancements to its Target Retirement Series
Vanguard | 9/28/2021
Because… Vanguard is the world’s largest target date fund (TDF) provider. As reported by Pensions & Investments, its institutional-priced Target Retirement Funds had $382.4 billion in assets and the investor-priced series had assets of $283.8 billion. According to Morningstar, target-date mutual funds and ETFs had total assets of $1.7 trillion, which means Vanguard accounted for about 39% of the TDF total. Consolidating its lineups, reducing expense ratios, lowering the minimum investment requirement, and introducing a new retirement income solution would make its TDFs more competitive. Other asset managers should follow Vanguard’s lead and examine the operational costs of their funds to see if there are opportunities to cut expenses. If fund fees can be reduced when assets of a plan grow or funds with higher expense ratios can be replaced with similar funds with lower expense ratios, it will make their TDF offerings more appealing and benefit both plan participants and sponsors.