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We’ll know investing in cryptocurrency has gone fully mainstream when Vanguard’s lineup of exchange-traded funds moves into that line of business.

For now, forget it. “I think we can definitively say that we are not actively working on a crypto ETF,” Vanguard Canada chief Kathy Bock said. “We are much more focused on offering broadly diversified ETFs and funds for investors.”

Having trouble deciding what goes in a soundly built, cost-efficient investment portfolio that will help you achieve your long-term financial goals? Your attention is directed to the roster of ETFs Vanguard has built since it arrived in the Canadian market 10 years ago.

The big investing stories of 2021 are mostly about taking chances and scoring big with meme stocks, hot sectors, zero-commission stock trading apps and, of course, cryptocurrencies such as bitcoin, ethereum and others. ETF companies have flung themselves into crypto to the extent that these funds hold $7.3-billion, which works out to a 2-per-cent market share.

None of the Big Three ETF companies in Canada, the RBC iShares group, BMO ETFs or Vanguard, have thus far ventured into crypto and micro-niche sectors such as the metaverse and digital medicine. But of these market-share leaders, it’s Vanguard that has kept its product lineup focused most tightly on the traditional pillars of portfolio-building and avoided the flash.

Ms. Bock said this approach reflects some of Vanguard’s core principles of investing success – using broadly diversified portfolios, taking a long-term perspective and keeping costs low. It’s traditional, but it turns out there’s a market for tradition. National Bank Financial’s ETF team says Vanguard ranked second in flows of money behind BMO ETFs through the first 11 months of the year.

“All the attention on speculative and niche investing makes headlines,” said Tim Huver, head of intermediary sales for Vanguard Canada. “But that’s certainly not where we’ve seen investors gravitating. We’ve had a record year in terms of adoption.”

The entire ETF industry has had a brilliant 2021. National Bank Financial numbers show total ETF assets came in at $313.5-billion as of Nov. 30, up 25.5 per cent on a year-over-year basis. Vanguard’s assets of $38.4-billion gave it a market share of 12.2 per cent, compared with 29.9 per cent for RBC iShares and 25.7 per cent for BMO.

Vanguard is unique in the investing world because it’s basically owned by its investing clients. You could say Vanguard is what you get when a bunch of smart, conscientious investing people run an ETF and mutual fund company based on proven principles and not market trends and investors whims.

This investors-first attitude can be seen in the way Vanguard has steadily reduced fees as rising asset levels gave it economies of scale. The company’s average ETF management expense ratio has fallen by roughly half over the past 10 years to 0.17 per cent. The industry average MER is 0.37 per cent, a reflection of the supercheap index-tracking funds mixing with costly sector funds.

Ironically, Vanguard is not the cheapest choice in a revolutionary ETF category it created almost four years ago – the complete, all-in-one portfolio that has long been available through balanced mutual funds. The MER for Vanguard’s asset allocation ETFs is 0.24 per cent, compared with 0.2 per cent for competing products from BMO and RBC iShares.

Another area where Vanguard has fallen behind is socially responsible investing, also known as ESG for the environmental, social and governance factors used to screen stocks. The company has yet to match its biggest competitors in launching ESG funds in the Canadian market.

Where Vanguard excels is in offering access to Canadian, U.S. and international stock and bond indexes at low cost. The ETF with the highest inflows for the first 11 months of the year? NBF says it’s the Vanguard S&P 500 Index ETF (VFV-T). The asset allocation ETF with the highest year-to-date inflows? The Vanguard Growth ETF Portfolio (VGRO-T).

Also on the list of Top 20 sellers for the first 11 months of 2021 were three crypto ETFs. It’s a speculator’s market in late 2021, but Vanguard’s success tells us that sober, sensible investing still has an audience.

Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.

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