Vanguard Goes Global With a New Fund While Adding ETFs Down Under
Reported by Neil Anderson, Managing Editor
Vanguard just launched the FTSE All-World ex-US Small-Cap Index Fund and the firm plans to release a family of ETFs in Australia. On Thursday the Valley Forge, Pennsylvania-based fund company unveiled the new international small-cap index fund while revealing its plans down under.
The Vanguard move may not surprise industry insiders, as the fund giant has had a presence in Australia since 1996. It launched the Vanguard Pooled Superannuation Trusts in 1998 and the Personal Superannuation Plan in 2001, and now boasts more than 30 funds and over A$57 billion in assets (or $32 billion) in the land of the outback.
The new FTSE fund, which Vanguard claims is the first international small-cap index fund covering developed and emerging markets, includes a 60 basis point Investor Share class, a 35 bps Institutional Share class and a 38 bps ETF Share class that will launch on April 2.
Company press Release
VALLEY FORGE, PA, March 19, 2009 — Shares of Vanguard’s new international small-cap index fund, Vanguard® FTSE All-World ex-US Small-Cap Index Fund, are now available for purchase. A two-week subscription period begins today and is expected to end April 2, after which the fund will implement its long-term investment strategy.
Vanguard FTSE All-World ex-US Small-Cap Index Fund offers Investor Shares, with an estimated expense ratio of 0.60%, and Institutional Shares, with an estimated expense ratio of 0.35%. The fund’s ETF Shares (NYSE Arca: VSS) will launch at the conclusion of the subscription period and will have an estimated expense ratio of 0.38%.
The new fund seeks to track the investment performance of the FTSE Global Small Cap ex US Index, a benchmark of approximately 3,300 stocks of companies located in 47 countries. It is the only international index fund in the industry to offer exposure to small-cap stocks of both developed and emerging markets outside the United States in a single portfolio (Source: Lipper Inc., February 27, 2009).
“Vanguard continues to broaden its stable of international index offerings, and this new small-cap fund will complement our array of broad-market, large-cap-oriented international index funds,” said Vanguard Chief Investment Officer Gus Sauter, who noted that the fund is the fourth international equity product introduced by Vanguard over the past two years. “Investors and financial advisors will be able to employ this new fund to gain broadly diversified, low-cost exposure to international small-cap stocks.”
According to a recent paper published by Vanguard’s Investment Counseling & Research group titled “The Global Recession and International Investing,” the long-term diversification benefits associated with international investing remain strong, despite the spillover to the global economy from the current U.S. recession. While future performance can never be guaranteed, the study finds that the benefits of international stocks as a diversifier should become most apparent when the stock market volatility abates and the global financial crisis eventually passes, at which time differences in the economic and financial market performance of the United States and other countries should emerge.
The minimum initial investment requirement for Vanguard FTSE All-World ex-US Small-Cap Index Fund is $3,000 for Investor Shares and $5 million for Institutional Shares. There will be a 0.75% fee on purchases and redemptions of the Investor and Institutional Shares to help defray the transaction costs associated with buying and selling foreign securities. The purchase and redemption fees do not apply while the subscription period is in effect.
Vanguard is a leading provider of index vehicles, including funds, ETFs, and annuity portfolios, with aggregate assets of nearly $400 billion. In 2008, more than $50 billion flowed into Vanguard index funds and ETFs. With over 30 years of indexing experience, Vanguard is the only company to offer both traditional index and exchange-traded fund shares closely tracking a broad range of benchmarks.
Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies and a leading provider of company-sponsored retirement plan services. Vanguard manages nearly $1 trillion in U.S. mutual fund assets, including nearly $450 billion in retirement assets. Vanguard offers more than 150 funds to U.S. investors and more than 50 additional funds in non-U.S. markets.