It's been an interesting time to be an index nerd since Vanguard
went on the index-change warpath with its most popular
And there are some significant lessons to be learned in
analyzing investor behavior since the changes were announced.
To recap, back on Oct. 2, Vanguard started the fourth quarter of
2012 by announcing it would be migrating 22 index funds-of which 18
are available as ETFs-to new indexes. It will move away from MSCI
indexes and organize the funds around CRSP and FTSE benchmarks.
At the time, we posted numerous articles and blogs analyzing
what we thought the long-term effect would be on investors.
We also documented what seemed to be a reversal of the flows
trend we saw throughout the past two years; namely, money flowing
into the Vanguard MSCI Emerging Markets ETF (NYSEArca:VWO) and out
of iShares' competing product, the iShares MSCI Emerging Markets
Along the way, we presented two webinars on the topic, one
outlining the MSCI-to-FTSE switch and one documenting the logic
behind the new CRSP U.S. Equity indexes. We also presented a
counterpoint argument, talking with MSCI and iShares about the MSCI
index series, the long-standing favorite in the international
But as we wrapped up 2012 here, I thought it worth taking a
deeper dive into how these index changes shook out more than just
in terms of investors. After all, none of the Vanguard ETFs has
yet, as the transitions happen in this year.
The first place to focus, of course, is on flows. In digging
through the year-end ETF flows, I grabbed just the 18 Vanguard ETFs
in question, and looked at their flows since the announcement:
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