Vanguard stands firm amid rush to the ETF exits

A record $17.5 billion was pulled from exchange-traded funds in August, but don't expect to see any sweat on the brows of the Vanguard crew. The Vanguard Group Inc. was the only company among the five largest ETF companies that had more money come in than go out for the month. Vanguard, the third-largest ETF company, had net inflows of $3.75 billion for the month, according to IndexUniverse LLC. Investors' confidence in Vanguard shouldn't come as a surprise, given the company has only had one month of companywide net outflows in the last 20 years. BlackRock Inc.'s iShares unit, the largest ETF company, had net outflows of $4.3 billion, mainly from investors fleeing its bond ETFs. The $2.5 billion iShares Barclays 3-7 Year Treasury Bond ETF (IEI), for example, had $2.5 billion withdrawn for the month, the second-most withdrawals for any ETF. The $135 billion SPDR S&P 500 ETF (SPY) had a surprising $14 billion pulled from it in the month, more than reversing July's $13 billion of inflows. It led to State Street Global Advisors, the second-biggest ETF company, to suffer more than $19 billion of outflows in total. The top three companies combined manage roughly 81% of the $1.4 trillion in ETF assets. Invesco PowerShares and WisdomTree Investments, the next two largest ETF companies, had net outflows of $807 million and $483 million, respectively. The $17.5 billion of net outflows from ETFs were the largest from the investment vehicles since January 2010, when $17.1 billion was withdrawn, according to BlackRock.