Vanguard Shifts Indexes On VTI, VXUS

IndexUniverse.com

Two of Vanguard’s biggest equity funds today will be begin trading with new indexes, abandoning their MSCI benchmarks and adopting FTSE and CRSP indexes, respectively, as part of the major shifts it set in motion last fall that are aimed at lowering costs for investors.

The funds involved are:

  • The $248 billion Vanguard Total Stock Market Index Fund as well as its $31.36 billion exchange-traded version, the Vanguard Total Stock Market ETF (VTI)
  • The $95 billion Vanguard Total International Stock Index Fund and its $1.67 billion exchange-traded version, the Vanguard Total International Stock ETF (VXUS)

 

VTI is switching to the CRSP US Total Market Index, and abandons the MSCI US Broad Market Index, while VXUS is shifting to the FTSE Global All Cap ex US Index and will no longer use the MSCI All Country World ex USA Investable Market Index, Vanguard said in a June 2 press release. Again, the changes are effective Monday, June 3.

The latest shifts are all part of a major overhaul Vanguard first announced last fall that involved index switches in 22 of its ETFs from MSCI benchmarks to FTSE ones for international strategies and to CRSP ones for U.S.-focused funds. CRSP is a research center of the University of Chicago’s Booth School of Business.

The index changes aren’t expected to result in major portfolio differences going forward.

Indeed, at the time of Vanguard’s change announcement on Oct. 2 of last year, the No. 3 U.S. ETF provider went to great lengths to downplay any  differences in returns between the MSCI indexes and the new enlisted ones.

Instead, it said the changes would enable it to lower indexing licensing fees, which it would pass on to investors, as Vanguard is a mutually structured company that runs at cost as a matter of course.

VTI now costs 0.05 percent, or $5 for each $10,000 invested, while VXUS costs 0.16 percent, which makes both among the cheapest in their respective classes.

 

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