The Vanguard Emerging Markets Stock Index Fund began tracking the FTSE Emerging Index on Jan. 10, 2013. Because of the index change, the name of the fund's exchange-traded fund will change to the Vanguard FTSE Emerging Markets ETF. The ETF's ticker symbol will not change.
The Emerging Markets Stock Index Fund has $76 billion in assets, making it the largest fund in its category. VWO, a share class of the fund, has $60 billion in assets and was the top-selling emerging markets ETF in the United States in 2012, according to IndexUniverse.
The FTSE Emerging Index is a market capitalization-weighted index that provides comprehensive coverage of emerging markets. The index was developed by FTSE, a leading provider of indexes used by asset managers and investors worldwide. Vanguard has entered into long-term agreements with FTSE that are expected to provide cost certainty and savings over time for investors.
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The index offers comprehensive and diversified exposure to 22 emerging market countries, including Brazil, Russia, India, and China. It is generally comparable to the fund's prior benchmark. The most notable difference between FTSE and MSCI's international indexes is that FTSE classifies South Korea as a developed market, making it necessary for the Emerging Markets Stock Index Fund to gradually sell down its South Korean exposure and invest the proceeds in the other markets in the index.
To minimize market impact during the transition, the Emerging Markets Stock Index Fund will follow the FTSE Emerging Transition Index for approximately six months. This extended transition will reduce the costs associated with trading large amounts of securities in a short period. To provide transparency to shareholders during the transition, FTSE will supply weekly updates of the transition index's composition at www.ftse.com/vanguard.
Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world's largest investment management companies and a leading provider of company-sponsored retirement plan services.
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