VALLEY FORGE, Pa., March 2, 2018 /PRNewswire/ -- Vanguard today announced plans to change benchmarks for three sector funds and their corresponding ETF Shares: Vanguard Telecommunication Services Index Fund, Vanguard Consumer Discretionary Index Fund, and Vanguard Information Technology Index Fund. The changes will be consistent with S&P Dow Jones and MSCI's planned revisions announced in November 2017 to the funds' respective target benchmarks under its Global Industry Classification Standards methodology.
"We're pleased with MSCI's changes as we believe the reconstituted benchmarks provide investors with a better representation of the sectors they track," said Vanguard Chief Investment Officer Greg Davis. "We have determined that these changes and our approach to adopting the new benchmarks are in the best interests of shareholders."
Vanguard's Equity Index Group will carefully manage the transition. Beginning in the second quarter of 2018, the funds will track custom transition benchmarks. These interim benchmarks are designed to ensure the changes are implemented in the most transparent, cost-efficient way for the funds' investors, while also reducing tracking error and mitigating market impact. The funds will track these custom benchmarks until MSCI's index changes are complete, at which time the Funds will revert back to their applicable MSCI benchmarks.
Vanguard has successfully employed transition benchmarks in the past to execute benchmark changes including the 2016 transition of the Vanguard Emerging Markets Stock Index Fund to the FTSE Emerging Markets All Cap China A Inclusion Index, and Vanguard Developed Markets Index Fund's 2015 changes to the FTSE Developed All Cap ex US Index benchmark.
The transition to the new benchmarks is not expected to result in material capital gains distributions to shareholders or changes to the funds' expense ratios.
Vanguard offers 11 sector index funds. Products in this low-cost series include: Vanguard Consumer Discretionary Index Fund, Vanguard Consumer Staples Index Fund, Vanguard Energy Index Fund, Vanguard Financials Index Fund, Vanguard Health Care Index Fund, Vanguard Industrials Index Fund, Vanguard Information Technology Index fund, Vanguard Materials Index Fund, Vanguard REIT Index Fund, Vanguard Telecommunication Services Index Fund, and Vanguard Utilities Index Fund. Vanguard's sector funds provide access to distinct segments of the overall market, and may complement a well-diversified portfolio for investors with a long-term investment horizon.
About Vanguard Vanguard is one of the world's largest investment management companies. As of January 31, 2018, Vanguard managed $5.1 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers 388 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com.
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Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy or sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
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The Global Industry Classification Standard ("GICS") was developed by and is the exclusive property and a service mark of MSCI Inc. ("MSCI") and Standard and Poor's, a division of McGraw-Hill Companies, Inc. ("S&P") and is licensed for use by Vanguard. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classification makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of its affiliates or any third party involved in making or compiling the GICS or any GICS classification have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.