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With passive investment strategies on the rise, investment vehicles such as exchange-traded funds (ETFs) are gaining more popularity than ever before among institutional and individual investors. The Vanguard Group offers numerous ETFs that follow a specific benchmark at a very low cost that have attracted billions of new funds since 2014. The following three Vanguard ETFs received the most capital inflows from Dec. 31, 2014, to Feb. 29, 2016, in absolute terms according to FactSet Research Systems, Inc.
Vanguard S&P 500 ETF
The Vanguard S&P 500 ETF (NYSEACRA: VOO) increased in assets under management (AUM) by about $12.8 billion from Dec. 31, 2014, to Feb. 29, 2016. Started in September 2010, the ETF tracks the performance of the S&P 500 Index by using a full replication investment strategy and has $212 billion in AUM. The fund mimics the performance of the 500 largest U.S. companies operating in leading areas of the U.S. economy. As of Jan. 31, 2016, the fund's largest sector exposure includes information technology at 20.7% allocation, financial services at 16% allocation and health care at 14.7% allocation. The fund's portfolio is well diversified and tracks a widely observed U.S. equity index, which explains this ETF's popularity. The top 10 holdings of the fund have 19.2% allocation and include companies such as Apple, Inc. (NASDAQ: AAPL), Alphabet, Inc. (NASDAQ: GOOGL), Microsoft Corporation (NASDAQ: MSFT) and Exxon Mobil Corporation (NYSE: XOM). The fund's holdings exclude unprofitable companies and stocks of companies with recent initial public offerings (IPO).
As of Feb. 29, 2016, the fund showed a year-to-date (YTD) loss of 5.10% and a one-year loss of 6.22%. VOO received a four-star overall rating from Morningstar in the large blend category for its straightforward investment approach. Its expense ratio is 0.05%, which is one of the lowest in its category.
Vanguard Total Stock Market ETF
The Vanguard Total Stock Market ETF (NYSEACRA: VTI) witnessed an approximately $3.6 billion increase in its AUM from Dec. 31, 2014, to Feb. 29, 2016. Created in May 2001, the Vanguard Total Stock Market ETF tracks the investment results of the CRSP US Total Market Index, which represents about 100% of the investable U.S. stock market. The fund holds a wide range of companies by market capitalizations and sectors, and has $390 billion in AUM. The largest sectors represented in the ETF's portfolio include financial services at 18.9% allocation, technology at 16.3% allocation and consumer services at 14.0% allocation. As of Jan. 31, 2016, the fund's portfolio has low concentration, with the top 10 holdings having 15.5% allocation.
The wide broad exposure to the U.S. stock market coupled with a low expense ratio partly explains the popularity of this Vanguard ETF. The fund represents a good choice as a core U.S. stock holding for any investment portfolio. As of Feb. 29, 2016, VTI showed a YTD loss of 5.69% and a one-year loss of 7.93%