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Vanguard launches Total World Stock Index Fund

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Giant US mutual fund and exchange-traded fund provider Vanguard has launched the Vanguard Total World Stock Index Fund, which seeks to track the investment performance of the FTSE All-Worl

Giant US mutual fund and exchange-traded fund provider Vanguard has launched the Vanguard Total World Stock Index Fund, which seeks to track the investment performance of the FTSE All-World Index, a benchmark comprising around 2,900 stocks in 47 countries.

‘Vanguard Total World Stock Index Fund is our first passively-managed global fund and provides exposure to the world’s stock markets through a single, low-cost vehicle,’ says Vanguard chief investment officer Gus Sauter. ‘We view the new offering as an ideal foundation fund for a well-diversified investment portfolio.’

The Vanguard Total World Stock Index Fund offers three share classes. The ETF shares, traded on NYSE Arca, have an estimated expense ratio of 0.25 per cent, which Vanguard says is the lowest level for any ETF tracking a broad global benchmark.

There are also investor shares, which require a USD3,000 minimum initial investment and have an estimated expense ratio of 0.45 per cent, and institutional shares, which  have the lowest estimated expense ratio at 0.20 per cent but entail a USD5m minimum initial investment.

The investor and institutional share classes levy a 0.25 per cent purchase fee to defray the transaction costs associated with buying foreign securities, and a 2 per cent redemption fee on shares sold within two months of purchase to deter short-term investing.

The FTSE All-World Index is a market capitalisation-weighted index designed to measure the performance of large and mid-capitalisation stocks worldwide. Companies domiciled in developed and emerging international markets represent around 59 per cent of the index, with the remaining 41 per cent made up of US stocks.

Three Vanguard funds currently seek to track FTSE benchmarks, the Vanguard FTSE Social Index Fund, Vanguard High Dividend Yield Index Fund and Vanguard FTSE All-World ex-US Index Fund. The latter fund has gathered nearly USD2.7bn in net assets since its launch in March 2007, including nearly USD2bn in the ETF shares.

The introduction of the Vanguard Total World Stock Index Fund brings the number of Vanguard’s index offerings to 52 mutual funds and 38 ETFs. Vanguard manages more than USD620bn in indexed assets, including more than USD50bn in ETFs.

Headquartered in Valley Forge, Pennsylvania, Vanguard is one of the world’s largest investment managers and a leading provider of company-sponsored retirement plan services. The firm manages more than USD1.3trn in US mutual fund assets, including more than USD390bn in employer-sponsored retirement plans, offering more than 150 funds to US investors and more than 50 funds in non-US markets.

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