VALLEY FORGE, Pa.--(BUSINESS WIRE)--In early October, Vanguard announced that Vanguard Emerging Markets Stock Index Fund, including Vanguard MSCI Emerging Markets ETF, would begin tracking the FTSE Emerging Transition Index in 2013 as an interim step toward ultimately tracking the FTSE Emerging Index. Effective with the opening of trading at 9:30 a.m. Eastern time on January 10, 2013, the fund and ETF will begin tracking the transition index, which will be available at www.ftse.com/vanguard.
In connection with the index change, the name of the fund’s ETF share class will change from Vanguard MSCI Emerging Markets ETF to Vanguard FTSE Emerging Markets ETF. The ETF’s ticker symbol (VWO) will not change.
Emerging Markets Stock Index Fund
The Emerging Markets Stock Index Fund has $76 billion in assets, making it the largest fund in its category (source: Bloomberg, 12/31/12). VWO, a share class of the fund, has $60 billion in assets and was the top-selling emerging markets ETF in the United States in 2012 (source: IndexUniverse).
FTSE Emerging Index
The FTSE Emerging Index is a market capitalization-weighted index that provides comprehensive coverage of emerging markets. The index was developed by FTSE, a leading provider of indexes used by asset managers and investors worldwide. Vanguard has entered into long-term agreements with FTSE that are expected to provide cost certainty and savings over time for investors.
The index offers comprehensive and diversified exposure to 22 emerging market countries, including Brazil, Russia, India, and China. It is generally comparable to the fund's prior benchmark. The most notable difference between FTSE and MSCI’s international indexes is that FTSE classifies South Korea as a developed market, making it necessary for the Emerging Markets Stock Index Fund to gradually sell down its South Korean exposure and invest the proceeds in the other markets in the index.
To minimize market impact during the transition, the Emerging Markets Stock Index Fund will follow the FTSE Emerging Transition Index for approximately six months. This extended transition will reduce the costs associated with trading large amounts of securities in a short period. To provide transparency to shareholders during the transition, FTSE will supply weekly updates of the transition index’s composition at www.ftse.com/vanguard.
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 $2 trillion in U.S. mutual fund assets, including more than $240 billion in ETF assets (as of 12/31/12). The firm offers more than 170 funds to U.S. investors and more than 70 additional funds in non-U.S. markets.
About FTSE Group
FTSE Group (FTSE) is a world leader in the provision of global index and analytical solutions. FTSE calculates indexes across a wide range of asset classes, on both a standard and custom basis. FTSE indexes are used extensively by investors worldwide for investment analysis, performance measurement, asset allocation, portfolio hedging and the creation of a wide range of index derivatives, funds, ETFs, and other structured products. For more information, visit www.ftse.com.
All asset figures are as of December 31, 2012.
For more information on Vanguard funds, visit vanguard.com, or call 800-662-7447 to obtain a prospectus. Visit our website, call 800-662-7447, or contact your broker to obtain a prospectus for Vanguard ETF Shares. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in Creation Unit aggregations. Instead, investors must buy or sell Vanguard ETF Shares in the secondary market with the assistance of a stockbroker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
Mutual funds and ETFs are subject to risks, including possible loss of principal. Foreign investing involves additional risks including currency fluctuations and political uncertainty. Stocks of companies in emerging markets are generally more risky than stocks of companies in developed countries. Diversification does not ensure a profit or protect against a loss in a declining market.
All rights in the FTSE Emerging Index (the “Index”) vest in FTSE International Limited (“FTSE”). “FTSE®” is a trademark of London Stock Exchange Group companies and is used by FTSE under license. The Vanguard Emerging Markets Stock Index Fund (the “Product”) has been developed solely by Vanguard. The Index is calculated by FTSE or its agent. FTSE and its licensors are not connected to and do not sponsor, advise, recommend, endorse or promote the Product and do not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Index or (b) investment in or operation of the Product. FTSE makes no claim, prediction, warranty or representation either as to the results to be obtained from the Product or the suitability of the Index for the purpose to which it is being put by Vanguard.
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