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November 15, 2017 at 10:15 AM
Vanguard is restructuring two REIT Index Funds and trimming the expense ratio for the institutional share class of its Total Stock Market Index and Institutional Index funds, according to a preliminary count of votes at Wednesday’s shareholder meeting.
(Related: John Bogle Warns: Vanguard Is Getting Too Big)
The Vanguard REIT Index Fund and Vanguard Variable Insurance Fund-REIT Index Portfolio are changing their benchmark index to provide broader exposure to the real estate market beyond REITs. The new benchmark is the MSCI US Investable Market Real Estate 25/50 Index, which includes property management and development companies in addition to REITs. (The 25/50 refers to the rules that no more than 25% of the value of a registered investment company may be invested in a single issuer and the sum of the weights of all issuers representing more than 5% of the fund should not exceed 50% of the fund’s total assets.)
(Related: Vanguard Plans 2 New Actively Managed Funds)
Ironically, the Vanguard REIT Index Fund will be reclassified to “nondiversified” from “diversified” in compliance with securities laws.
Vanguard shareholders also approved a change to the fund service agreements for the Vanguard Institutional Total Stock Market Index Fund and Vanguard Institutional Index Fund that will reduce the expense ratio for both, from 0.04% to 0.035% and lower minimum initial investment requirements.
Shareholders of hundreds of other Vanguard funds voted on changes that would give the funds more flexibility when changing advisors. Shareholders of 195 funds voted on a proposal that would let the funds retain Vanguard subsidiaries as investment advisors without first obtaining shareholder approval, and they approved the change for 179 funds.
