Vanguard just lost $60m
A Vanguard ETF I closely follow seems to have just lost $60m in Funds Under Management (FUM)…about 27%…and I think I know where it went.
VEQ is Vanguard’s European exposure ETF that I use to supplement VGS (Whole world Ex-Australia) when I went to go overweight Europe. The ASX ETF reports (which you can access here) shows monthly FUM movements. My understanding is FUM is impacted by both value of the ETF holdings but also how much money is going in and out of the ETF.
The ASX reports breaks out the FUM from Funds Inflows and Outflows and it seems sometime in February, VEQ had funds outflow of $60m. This is a considerable chunk of the FUM causing it to drop from $236m to $171m.
Interestingly, it seems around the same period IEU, which is iShares’ European exposure ETF, had a Funds inflow of around $70m. Both these movements are out of the ordinary for these ETFs which rarely see more than $10m going in and out of them every month.
VEQ loosing ~$60m in February and IEU gaining around the same…interesting. Data from ASX’s monthly ETF reports.
So while it all seems to neatly point towards a shift in funds between ETFs that both have European exposure, I guess you can never be sure unless you’re the actual investor who shifted that money.
Visible on standard trading activity
I was curious to see if it was possible to see this shift in normal broker trading data. I’d be great to actually see this happening during the month and not retrospectively. A quick look at the standard ASX volume data showed a large selling event occur for VEQ (23rd Feb 2021).
But what’s more interesting is the money had gone into IEU earlier in the month (5th Feb 2021) …at least according to the volume trading graph.
So maybe it wasn’t the same investor? I’ve certainly not been in a situation where I’ve had money hanging around to invest first before I’ve closed off another position - but maybe this particular investor did? I’m not sure. It could also be the way the volume movements occur causing the actual trade to look like it happened later/earlier than it actually did.
What I’m thinking
I’m worried about this recent shift, but not to the point of taking action on the VEQ holding yet. I mean what can I really do? Sell the VEQ holding and redeploy it into IEU? Follow the lead of this particular investor? Probably not. I’m not even sure what the capital gains tax would be (if any).
For now I’m happy to hold and monitor. But if I do need to increase my European exposure, I’ll probably take another look at IEU before I add to my VEQ position.
Have you been keeping an eye on the funds flow for any of your ETFs? What would you do if you saw one of your ETFs just loose 27% of its FUM in one month and it transfer to another Fund?