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Vanguard to offer ETF shares in global stock index fund


Vanguard has filed a registration statement with the Securities and Exchange Commission for the group’s first passively managed global index fund, the Vanguard Global Stock Index Fund.

Vanguard has filed a registration statement with the Securities and Exchange Commission for the group’s first passively managed global index fund, the Vanguard Global Stock Index Fund. The fund will offer three share classes – Investor Shares, Institutional Shares, and ETF Shares – and is expected to launch before the middle of this year.

The new fund will seek to track the performance of the FTSE All-World Index, a float-adjusted, market-capitalisation-weighted index designed to measure the equity market performance of large- and mid-cap stocks worldwide.

The fund will invest in a broadly diversified sampling of securities from the target benchmark, which comprises more than 2,800 large- and mid-cap stocks of companies in 48 countries. Approximately 55 per cent of the index is made up of stocks from outside the US.

‘A global index fund is a logical extension to our index fund line-up,’ says Vanguard chief investment officer Gus Sauter. ‘The new Vanguard Global Stock Index Fund will enable investors to own the world’s stock markets through a single, low-cost holding.’

Since pioneering the first retail index mutual fund three decades ago, Vanguard has become a leading provider of index vehicles, now offering 70 indexed fund and annuity portfolios with aggregate assets of more than USD575bn. The firm is also a leader in the exchange-traded fund marketplace, currently managing more than USD42bn in 37 ETFs.

The fund’s ETF Shares have an estimated expense ratio of 0.25 per cent, while the Investor Shares, which will require a USD3,000 minimum initial investment, have an estimated expense ratio of 0.45 per cent, and the Institutional Shares, with a USD5m minimum initial investment requirement, have an estimated expense ratio of 0.20 per cent.

To offset the transaction costs associated with global investing and to protect the interests of long-term shareholders, the fund will levy a 0.15 per cent purchase fee on all non-ETF share purchases and a 2 per cent redemption fee on all non-ETF assets redeemed within two months of purchase.

Three Vanguard funds currently track FTSE benchmarks, the Vanguard FTSE Social Index Fund, Vanguard High Dividend Yield Index Fund, and Vanguard FTSE All-World ex-US Index Fund. Established in 1995, FTSE Group is a leader in the creation and management of indices and related market data services, serving clients in more than 77 countries, and an estimated USD2.5trn is currently benchmarked to FTSE indexes worldwide.

Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment managers and a provider of company-sponsored retirement plan services, managing nearly USD1.25trn in U.S. mutual fund assets, including more than USD350bn in employer-sponsored retirement plans. Vanguard offers more than 150 funds to US investors and more than 50 funds in other markets.

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