A Vanguard Group equity fund has become the first of its kind to accumulate $1 trillion in assets, a testament to the increase in equity-focused investments over the past three decades.
The Vanguard Total Stock Market Index fund, which includes a mutual fund and an ETF had $1.04 trillion in assets as of November 30, according to company data.
“Given that Vanguard has given rise to index investments, it seems appropriate that one of its major funds be the first to reach that historic milestone,” said Nate Geraci, president of ETF Store, an investment consulting firm.
While the strong appreciation of US stocks drives the fund, the fall in commissions also helps, a trend fuelled by Vanguard, a pioneer in low-cost passive investments. The Vanguard Total Stock Market Index fund was established in 1992, with its ETF launched in 2001.
“Investors are much better informed about the importance of fund rates and underperformance of active management,” Geraci said. These factors can drive the fund even further for decades, he said.
Vanguard follows an atypical format, as its ETFs exist as a class of shares in its mutual funds. The Vanguard Total Stock Market ETF attracted most funds among all ETFs this year, with $30.8 billion in net inflows. Vanguard controls 28% of the $5.3 billion ETF sector in the United States.
