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Vanguard launches actively managed emerging markets select stock fund


Vanguard has introduced the Vanguard Emerging Markets Select Stock Fund, an actively managed emerging markets equity fund that will employ four highly regarded global advisory firms: M&G Investment Management Limited, Oaktree Capital Management, L.P., Pzena Investment Management, LLC, and Wellington Management Company, LLP.


The fund is now accepting investments during a two-week subscription period that is expected to conclude at the end of business on June 27, 2011.

Following the subscription period, fund assets will be allocated equally among the four investment advisors. The firms’ teams have decades of combined experience in emerging markets equity management, with differentiated but complementary investment approaches.

Vanguard Emerging Markets Select Stock Fund seeks to provide long-term capital appreciation by investing in equity securities of small-, mid-, and large-capitalisation companies located in emerging markets. It will have an estimated expense ratio of 0.95% (USD9.50 for every USD1,000 invested), which is 40% lower than the average expense ratio of other emerging markets funds at 1.68% (source: Lipper, December 31, 2010).

The fund will be available to individual retail investors who invest directly with Vanguard and will require a USD3,000 minimum initial investment. As with its other international stock funds, Vanguard will assess a 2% redemption fee on shares held less than 60 days in an effort to deter short-term trading. The fee, which is not a load, is paid directly back to the fund to offset transaction costs.

Vanguard has offered both index and active funds for more than 35 years, and some 44% (USD748 billion) of the firm’s total assets under management are in 73 actively managed funds. Of Vanguard’s 29 actively managed stock funds, 15 use a multi-manager approach.

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