Vanguard, which had net inflows of nearly $16 billion in January and February 2008, filed a registration statement with the Securities and Exchange Commission in early April for its first passively managed global index fund: the Vanguard Global Stock Index Fund. It expects to introduce the new fund in the second quarter with three share classes — investor, institutional and ETF shares.
Vanguard says the new fund will seek to track the performance of the FTSE All-World Index, a market-capitalization-weighted index that measures the equity market performance of large- and mid-capitalization stocks worldwide. The fund will invest in a broad mix of securities from the target benchmark, which includes more than 2,800 large- and mid-cap stocks of companies in 48 countries. Some 55 percent of the index is made up of non-U.S. stocks.
“A global index fund is a logical extension to our index fund lineup,” 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.”
Vanguard introduced the first retail index mutual fund three decades ago and now offers 70 indexed fund and annuity portfolios with aggregate assets of more than $575 billion.
The new fund’s investor shares will require a $3,000 minimum initial investment and have an estimated expense ratio of 0.45 percent, while the institutional shares will entail a $5 million minimum initial investment requirement and have an estimated expense ratio of 0.20 percent. To offset the transaction costs associated with global investing and to protect the interests of long-term shareholders, the fund will assess a 0.15 percent purchase fee on all non-ETF share purchases and a 2 percent 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-U.S. Index Fund. An estimated $2.5 trillion is currently benchmarked to FTSE indexes worldwide. Valley Forge, Pa.-based Vanguard manages nearly $1.25 trillion in U.S. mutual fund assets.
In other developments at Vanguard, the fund powerhouse says it has reassigned portfolio-management responsibilities for five internally managed tax-exempt fixed-income funds.
Marlin G. Brown has assumed responsibility for long-term tax-exempt funds in Pennsylvania, Ohio and Massachusetts; he also manages the $7 billion Vanguard Limited-Term Tax-Exempt Fund (VMLTX).
Brown replaces John M. Carbone, who will continue to oversee the $3.2 billion Vanguard Insured Long-Term Tax-Exempt Fund (VILPX) and the $1.8 billion Vanguard New Jersey Long-Term Tax-Exempt Fund (VNJTX). Kathryn T. Allen now manages the $3.4 billion Vanguard New Jersey Tax-Exempt Money Market Fund (VNJXX), taking over from Brown. Allen continues to manage the California, New York and Pennsylvania tax-exempt money market funds.
And Pamela W. Tynan is managing the Ohio tax-exempt money market fund, replacing Brown. In addition, Tynan manages the $22 billion Vanguard Tax Exempt Money Market Fund (VMSXX) and the $4.2 billion Vanguard Short-Term Tax-Exempt Fund (VWSTX).
Janet Levaux is the managing editor of Research; reach her at firstname.lastname@example.org.