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Major Firms Add to International Offerings

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Vanguard has introduced the Vanguard Total World Stock Index Fund, which aims to track the investment performance of the FTSE All-World Index, a benchmark of some 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.”

Investor shares (trading as VTWSX) require a $3,000 minimum initial investment and have an estimated expense ratio of 0.45 percent. They also have a 0.25 percent purchase fee to help defray the transaction costs associated with buying foreign securities and a 2 percent redemption fee if sold within two months of purchase.

According to Vanguard, the FTSE All-World Index is a market-capitalization-weighted index that measures the performance of large- and mid-capitalization stocks worldwide. Stocks of companies domiciled in developed and emerging international markets represent roughly 60 percent of the index, while the remaining 40 percent are U.S. stocks.

The introduction of Vanguard Total World Stock Index Fund brings the number of Vanguard’s index offerings to 52 funds.

In other developments, Vanguard is also reducing fees on the conventional shares of two index funds: The Vanguard FTSE All-World ex-U.S. Index Fund has eliminated its 0.25% purchase fee, and the Vanguard Emerging Markets Stock Index Fund has reduced both its purchase fee and its redemption fee from 0.50 percent to 0.25 percent

In addition, the board of trustees of the Vanguard Explorer Fund has named Century Capital Management, LLC, as the seventh advisor to the $11 billion fund. This will be the first mandate that Century Capital, an independent, Boston-based investment advisory firm, has managed for Vanguard.

According to Vanguard, Explorer seeks long-term capital appreciation using a multi-manager approach that provides exposure to a broad universe of small-company growth stocks. Century Capital will initially manage a relatively modest portion of the fund’s assets, the fund company says.

As of April 30, the breakdown of assets among the other advisors was: Granahan Investment Management, Inc., 22 percent; AXA Rosenberg Investment Management LLC, 13 percent; Kalmar Investment Advisers, 14 percent; Wellington Management Company, LLP, 14 percent; Chartwell Investment Partners, 9 percent; and Vanguard Quantitative Equity Group, 25 percent; with the remaining 4 percent held in cash.

The Vanguard Explorer Fund has been closed to new investors since February 2006, and additional purchases by current shareholders are capped at $25,000 annually per fund account. The addition of the new advisor is not expected to impact the fund’s 0.41 percent expense ratio.

Lord, Abbett & Co. LLC has launched the Lord Abbett International Dividend Income Fund (LIDAX), a dividend-focused total-return strategy that seeks to invest in international stocks with high and sustainable dividend yields, and below-average valuations.

The portfolio management team is led by Vincent McBride and Harold Sharon. McBride says that dividends paid by international companies historically have been higher than those paid by U.S. companies. “Historically, adding high-dividend-paying international stocks to a diversified equity portfolio has offered lower volatility while delivering higher returns,” he explains.

In addition, Janus Capital Group Inc., is now offering investors the Janus Adviser International Forty Fund (JFFAX), a concentrated portfolio that seeks long-term growth of capital by investing directly in 30 to 50 companies across developed and emerging markets. According to Janus, the fund’s benchmark is the Morgan Stanley Capital International (MSCI) All Country World ex-U.S. Index.

“By concentrating the fund’s investments in a limited number of holdings, we think our most compelling stock picks could possibly make more meaningful contributions to the fund’s overall returns, says Jonathan Coleman, co-chief investment officer of Janus. “At Janus, we believe investing with conviction can potentially lead to superior returns over time.”

Portfolio manager Laurent Saltiel will manage the new Janus fund. Saltiel also co-manages Janus Adviser International Equity Fund.

Finally, Ivy Funds has launched a new global fixed-income mutual fund designed to expand bond investors’ horizons beyond the United States — the Ivy Global Strategic Income Fund, which can invest up to 20 percent of its assets in equities globally.

“The U.S. represents less than half of the global bond market today, and its share is declining,” explains Dan Vrabac, senior vice president of Ivy Investment Management Company and co-portfolio manager of the new fund.

Minimum initial investment in the Ivy Global Strategic Income Fund is $500.

Janet Levaux, MBA/MA, is the managing editor of Research; reach her at [email protected].


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