Looking at the list of hot-selling exchange-traded funds is normally an iffy way to figure out what investors are thinking.
A lot of the flow of money in and out of ETFs is driven by hedge funds, mutual funds, pension funds and endowments that reflect institutional views on portfolio management. But there’s one ETF on the latest list of top sellers that’s directly tied into the mindset of individual investors – the Vanguard Growth ETF Portfolio (VGRO-T).
VGRO is not burning up the sales charts, but it did grab 18th spot among the Top 20 sellers for the year to Oct. 31. Overall, it has a respectable $1.5-billion in assets and ranks among the largest funds in the category of balanced ETFs, also known as asset-allocation ETFs.
VGRO offers a way to buy a growth portfolio with a blend of 80-per-cent exposure to Canadian, U.S. and international (developed and emerging market) stocks, and 20-per-cent bonds from Canada, the United States and markets outside North America. The management expense ratio for VGRO is 0.25 per cent, quite fair but not as cheap as the 0.2 per cent MER for competing products from BlackRock and Bank of Montreal.
How do we know that VGRO’s sales numbers represent the thinking of individuals instead of big players? Because it’s an investment for people who want to buy and hold. If you were an institutional investor rotating into an asset class or taking a temporary position, why do it with a portfolio-in-a-box product like VGRO, with its seven underlying holdings?
The growth version of asset-allocation ETFs is proving to be most popular with investors, ahead of balanced versions that tend to have a tamer 60-40 mix of stocks and bonds. For example, the Vanguard Balanced ETF Portfolio (VBAL-T) has assets of $1.2-billion and the Vanguard Conservative ETF Portfolio (VCNS-T) holds $374-million.
VGRO’s 80-20 mix is aggressive. It’s for investors who can gut it out during stock market crashes like we saw in March and who won’t need their money for at least 10 years. As the latest sales charts show, a fair number of people are buying into this approach.
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