Credit: Shutterstock photoIt's been an interesting time to be an index nerd since Vanguard went on the index-change warpath with its most popular ETFs .
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 fund (NYSEArca:EEM).
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 space.
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 actually changed anything 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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%20to%20me%20signals%20that%20this%20is%20%E2%80%9Ctrading%E2%80%9D%20money,%20not%20long-term%20buy-and-hold%20money.%20IEMG%20has%20pulled%20in%20just%20%24169%20million%20in%20net%20flows%20in%20the%20fourth%20quarter,%20suggesting%20that%20the%20money%20out%20of%20VWO%20hasn%E2%80%99t%20simply%20found%20a%20new%20home.%3C/p%3E%0A%3Cp%3E%C2%A0%3C/p%3E%0A%3Chr%20class='system-pagebreak'%20/%3E%0A%3Cp%3E%C2%A0%3C/p%3E%0A%3Cp%3EFurther%20evidence%20that%20the%20switch%20from%20MSCI%20indexes%20to%20FTSE%20indexes%20isn%E2%80%99t%20a%20cause%20for%20panic%20can%20be%20found%20elsewhere%20in%20the%20product%20line.%3C/p%3E%0A%3Cp%3EBoth%20the%20Vanguard%20MSCI%20EAFE%20ETF%20(NYSEArca:VEA)%20and%20the%20Vanguard%20Total%20Stock%20Market%20ETF%20(NYSEArca:VTI)%20had%20strong%20inflows%20in%20the%20face%20of%20the%20coming%20index%20changes.%3C/p%3E%0A%3Cp%3EVEA%20in%20particular%20has%20generated%20continuously%20strong%20interest,%20versus%20the%20occasional%20inflows%20we%E2%80%99ve%20seen%20in%20iShares%E2%80%99%20competing%20product,%20the%20iShares%20MSCI%20EAFE%20ETF%20(NYSEArca:EFA).%3C/p%3E%0A%3Cp%3E%C2%A0%3C/p%3E%0A%3Cp%3E%3Cimg%20alt='VEA'%20height='319'%20width='550'%20src=)
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.