Vanguard ETFs are worth $6.5B at current prices, analyst says
Vanguard’s $6 billion index fund, which tracks the S&P 500 index, is trading at a price of $6,711 a share.
That compares with a market price of about $6 a share for the benchmark Standard & Poor Index Fund, which is trading near the $6 mark.
The Vanguard ETF is also up $1 billion since Monday, making it the largest U.S. ETF since 2008.
That’s a strong performance, said Charles Shaffer, a portfolio manager at Vanguard’s Investment Management business unit in Palo Alto, California.
“Vanguard has done a good job of staying on top of the trends and the volatility and is one of the most highly regarded indexes in the world,” he said.
Vanguard’s performance compares with about $4 billion a year in returns for the S.&.&adamp;S.
Index Fund over the same period.
The average Vanguard fund, the Vanguard S≈P 600 index fund and the Standard &adamp.; Poor Index fund, have averaged around 1 percent a year over the past decade, Shaffer said.
He expects a return of about 7 percent for the Vanguard index fund.
Vanguard said Wednesday it had about $30 billion of cash in the fund.
Vanguard’s benchmark fund, however, is also in the midst of a bear market.
The S&trix Index Fund is down 5.4 percent this year, compared with a gain of about 6.4 percentage points over the last five years.
The index fund is trading below the S=SP 500 for the first time since 2012.
The S>amp is down 7.3 percent this cycle, compared to a gain about 7.7 percentage points.
The benchmark fund is also down about 15 percent over the previous five years, according to Morningstar.
Investors are generally more conservative when it comes to investing in stocks, and this is probably the case for Vanguard, Shaper said.
But he noted that investors could have other reasons for holding the index funds.
Vanguard has a strong track record in high-quality, long-duration corporate bonds, Shafer said.
“They’re well diversified,” he added.
S& is one ETF that has a history of rising, according the Morningstar ratings.
In the past four years, the S/ESP 500 Index Fund has grown from about $13 billion in 2016 to $29 billion today.
That is the highest annual increase since the index was launched in 1929.
Vanguard says the S &=SP 400 index is a “marketable” index fund with no debt or stock holdings, but Shaper and others have questioned its long-term value.
Vanguard does have a portfolio of high-yield corporate bonds that could be used to diversify the index, but the company has been trading them below their historical averages for years, he said, and it would be prudent for investors to buy a smaller portion of the fund and then hold the rest.