The Markets October 2, 2012

Vanguard Changes Benchmarks for 22 Index Funds

Vanguard announced new benchmark indices for 22 of its index funds.
Reported by

Vanguard plans to transition six international stock index funds to FTSE benchmarks and 16 U.S. stock and balanced index funds to new benchmarks developed by the University of Chicago’s Center for Research in Security Prices (CRSP). The transition from the current MSCI benchmarks for the 22 funds is expected to result in considerable savings for the funds’ shareholders over time.  

The funds impacted by the change, their current benchmarks and proposed benchmarks are: 

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  • Vanguard European Stock Index Fund, MSCI Europe Index, FTSE Developed Europe Index  
  • Vanguard Pacific Stock Index Fund, MSCI Pacific Index, FTSE Developed Asia Pacific Index 
  • Vanguard Emerging Markets Stock Index Fund, MSCI Emerging Markets Index, FTSE Emerging Index 
  • Vanguard Total International Stock Index Fund, MSCI ACWI ex USA IMI Index, FTSE Global All Cap ex US Index 
  • Vanguard Developed Markets Index Fund, MSCI EAFE Index, FTSE Developed ex North America Index 
  • Vanguard Tax-Managed International Fund, MSCI EAFE Index, FTSE Developed ex North America Index 
  • Vanguard Total Stock Market Index Fund, MSCI US Broad Market Index, CRSP US Total Market Index 
  • Vanguard Institutional Total Stock Market Index Fund, MSCI US Broad Market Index, CRSP US Total Market Index  
  • Vanguard Balanced Index Fund, Balanced Composite Index: (60% MSCI US Broad Market Index and   40% Barclays U.S. Aggregate Flt Adjusted), Balanced Composite Index: (60% CRSP US Total Market Index and 40% Barclays U.S. Aggregate Flt Adjusted) 
  • Vanguard Mega Cap 300 Index Fund, MSCI US Large Cap 300 Index, CRSP US Mega Cap Index 
  • Vanguard Mega Cap 300 Growth Index Fund, MSCI US Large Cap Growth Index, CRSP US Mega Cap Growth Index 
  • Vanguard Mega Cap 300 Value Index Fund, MSCI US Large Cap Value Index, CRSP US Mega Cap Value Index 
  • Vanguard Large-Cap Index Fund, MSCI US Prime Market 750 Index, CRSP US Large Cap Index 
  • Vanguard Growth Index Fund, MSCI US Prime Market Growth Index, CRSP US Large Cap Growth Index 
  • Vanguard Value Index Fund, MSCI US Prime Market Value Index, CRSP US Large Cap Value Index 
  • Vanguard Mid-Cap Index Fund, MSCI US Mid Cap 450 Index, CRSP US Mid Cap Index 
  • Vanguard Mid-Cap Growth Index Fund, MSCI US Mid Cap Growth Index, CRSP US Mid Cap Growth Index 
  • Vanguard Mid-Cap Value Index Fund, MSCI US Mid Cap Value Index, CRSP US Mid Cap Value Index 
  • Vanguard Small-Cap Index Fund, MSCI US Small Cap 1750 Index, CRSP US Small Cap Index 
  • Vanguard Small-Cap Growth Index Fund, MSCI US Small Cap Growth Index, CRSP US Small Cap Growth Index 
  • Vanguard Small-Cap Value Index Fund, MSCI US Small Cap Value Index, CRSP US Small Cap Value Index 
  • VVIF Mid-Cap Index Portfolio, MSCI US Mid Cap 450 Index, CRSP US Mid Cap Index  

“The indexes from FTSE and CRSP are well constructed, offer comprehensive coverage of their respective markets and meet Vanguard’s ‘best practice’ standards for market benchmarks,” said Vanguard Chief Investment Officer Gus Sauter. “Equally important, and with our clients’ best interests in mind, we negotiated licensing agreements for these benchmarks that we expect will enable us to deliver significant value to our index fund and ETF shareholders and lower expense ratios over time.”

In an environment in which index licensing fees, in general, have represented a growing portion of the expenses that investors pay to own index funds and ETFs, Sauter noted that the long-term agreements with FTSE and CRSP will provide cost certainty going forward with these two index providers.

 

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