From the January 2011 issue of Research Magazine • Subscribe!

Targeting Global Property

Vanguard has introduced the Vanguard Global ex-U.S. Real Estate Index Fund (VNQI), which is linked to the S&P Global ex-U.S. Property Index. It invests in real estate investment trusts (REITs) and real estate operating companies (REOCs) in emerging markets along with developed markets outside the United States. The new global property ETF will complement the Vanguard REIT Index Fund (VNQ), which holds domestic real estate securities.

VNQI charges annual fees of 0.35 percent, quite low compared to peer mutual funds. According to Lipper, international real estate mutual funds have an asset-weighted expense ratio of 1.31 percent on average.

“Modest exposure to real estate investments in a broadly diversified investment portfolio can help moderate overall portfolio volatility and serve as a hedge against inflation,” said Vanguard’s chief investment officer Gus Sauter. “With international real estate securities representing a growing portion of the overall real estate market, a counterpart to our domestic REIT Index Fund is a natural addition to our index fund lineup.”  

VNQI’s underlying benchmark is a free-float-adjusted, market-capitalization-weighted index that measures the equity market performance of 425 international real estate securities from 35 developed and emerging markets.

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