Vanguard, the company behind the worldâs biggest emerging
markets ETF, âVWO,â is broadening the scope of its Total World
Stock Index Fund (NYSEArca:VT) by adopting a different FTSE
benchmark that adds small-cap companies and deepens the
securityâs penetration to global equity markets.
VT will now replicate the FTSE Global All Cap Index, a
float-adjusted market-capitalization-weighted benchmark that tracks
the performance of large-, mid- and small-cap stocks globally,
capturing some 98 percent of the worldâs investable universe.
The ETF, which has about $963 million in assets, previously
tracked the FTSE All-World Index, which provided exposure to about
97 percent of the worldâs investable equities universe. The index
switch shouldnât result in any capital gains distributions,
Vanguard said in a press release.
The index change means even broader exposure to a fund that
already holds some 2,900-plus names around the globe. By
comparison, VTâs closest competitor, the $1.95 billion iShares
MSCI ACWI Index Fund (NYSEArca:ACWI), is a more optimized strategy
and includes fewer than 1,100 securities.
VT, which has a total of $1.4 billion including assets wrapped
in different open-end mutual funds, should also remain the cheaper
of the two, costing ETF investors 0.25 percent in fees despite the
index changeâACWI costs 0.34 percent. VTâs fees were slashed as
recently as February from 0.30 percent to reflect greater
efficiencies and economies of scale.
âThe fund now offers even broader exposure to the worldâs
equity markets in a single, low-cost vehicle,â Vanguardâs Chief
Investment Officer Gus Sauter said in the press release.
The Valley Forge, Pa.-based company offers a total of four ETFs
that serve up âtotal marketâ exposure to both equities and
Other than VT, Vanguard also offers the Total Stock Market Index
Fund (NYSEArca:VTI) and the Total International Stock Index Fund
(NYSEArca:VXUS), each essentially a subset of VT, one focused on
the U.S. and the other on international equities.
The Vanguard Total Bond Market Index Fund (NYSEArca:BND) is a
broad fixed-income portfolio.
Apple Inc., Exxon Mobil, IBM Corp. and Microsoft Corp. top
VTâs holdings list, with the U.S. representing just over 40
percent of the portfolioâs country allocation.
Like all Vanguard ETFs, VT is a separate class of the same
mutual fund. The other classes of VT are actual mutual funds and
include so-called Investor Shares (VYWSX) and Institutional Shares
(VTWIX). The mutual funds cost 0.45 percent and 0.23 percent,
respectively, the company said.
While those fees remain the same, Vanguard said it is now
eliminating a 0.25 percent purchase fee thatâs paid directly to
the fund to cover stock purchasing costs, effective
âGiven the level of fund assets and transaction activity, new
share purchases can be offset with shareholder redemptions,â the
company said in a press release. âThis reduces net purchasing
activity and results in lower transaction costs, thereby
eliminating the need for the purchase fee.â
Vanguard is the U.S.â third-largest ETF provider, with $165
billion in assets under management, according to data compiled by
Don't forget to check IndexUniverse.com's ETF Data
2011 IndexUniverse LLC
. All Rights Reserved.