Vanguard S&P 500 Fund Sees Mysterious $7 Billion Outflow: Report

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There is speculation surrounding the record outflow of $7 billion from one of Vanguard Group's biggest exchange-traded funds (ETFs).

Over $7 billion was taken out from the $172-billion Vanguard S&P 500 ETF (VOO) in just one day during the week ended December 4, which was around 4 percent of the fund's assets, Bloomberg reported.

However, trading volumes were less than the one-year average and there were no obvious outsized transactions, the report said. US benchmark indices had risen on that day, making a mass sell-off unlikely.

It is so far unclear who pulled the cash out of the fund.

Moneycontrol could not independently verify the story.

There is a theory that a major holder of the fund executed a large over-the-counter trade, Bloomberg reported.

"We think the redemption didn't show up because it was an outsized primary market sale," said Eric Balchunas, a Bloomberg Intelligence ETF analyst said.

Balchunas used the analogy of shopping for a tie, saying that "this is like someone going straight to the tiemaker and that's rare since most ETF usage is smaller investors", he said.

Spokespeople for Vanguard and Parametric declined to comment on the flows when contacted by Bloomberg.

Bank of America is the largest holder in the fund, with shares worth about $14 billion, according to Bloomberg data. Raymond James Financial is next with about $5.2 billion, followed by Parametric Portfolio Associates with $4.9 billion.

Bank of America and Raymond James did not immediately respond when contacted by Bloomberg.

"Trading activity and flows are not actually systemically tied together," Dave Nadig, chief investment officer and director of research at ETF Flows, told Bloomberg.