VALLEY FORGE, Pa., Nov. 1, 2015 /PRNewswire/ -- Vanguard announced that the $50 billion Vanguard Emerging Markets Stock Index Fund, including its ETF share class (ticker: VWO), will begin tracking a new FTSE transition index, in the first phase of a two-phase change to a new target index, FTSE Emerging Markets All Cap China A Inclusion Index. This change will be effective with the opening of trading on November 2, 2015.
To minimize market impact, in the first phase, the fund will track the FTSE Emerging Markets All Cap China A Inclusion Transition Index, an interim index that will gradually increase exposure to small-capitalization stocks and China A-shares while proportionately reducing exposure to other stocks based on their weightings in the new index. The transition is expected to occur over approximately 12 months and 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 monthly updates of the transition index's composition at ftse.com/vanguard.
In the second phase, at the conclusion of the transition, the fund will track its new target index, the FTSE Emerging Markets All Cap China A Inclusion Index,1 which is a market-capitalization-weighted index made up of approximately 3,500 common stocks of large-, mid-, and small-cap companies located in emerging markets around the world. As a result, Vanguard Emerging Markets Stock Index Fund will be the first broad-based market-capitalization weighted index fund to include both all-cap exposure and China A-shares.2 These changes move investors closer to full market-cap weightings and provide investors with more complete and diversified exposure to China, a key emerging economy with the world's second-largest gross domestic product and stock market.3
The transition is part of the changes to four international equity index funds announced by Vanguard in June 2015.
Vanguard is one of the world's largest investment management companies. As of September 30, 2015, Vanguard managed $3.2 trillion in global assets, including $445 billion in ETF assets. The firm, headquartered in Valley Forge, Pennsylvania, offers 302 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com.
1 FTSE Emerging Markets All Cap China A Inclusion Index comprises large-, mid- and small-cap securities of the FTSE Emerging All Cap Index and FTSE China A All Cap Index. The weight of the FTSE China A All Cap Index in the FTSE Emerging Markets All Cap China A Inclusion Index will be adjusted by the quota available to international investors.
2 Source: Bloomberg, as of September 30, 2015.
3 China A-shares make up about 9.4% of world stock market capitalization, second-largest after the U.S. stock markets. With the world's second-largest GDP, China also accounted for 13.3% of world GDP in 2014, according to Bloomberg WCAP.
All asset figures are as of September 30, 2015, unless otherwise noted. Source: Vanguard.
For more information on Vanguard funds, visit vanguard.com, or call 800-662-7447 to obtain a prospectus. Visit our website, call 800-662-7447, or contact your broker to obtain a prospectus for Vanguard ETF Shares. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.
All investments are subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Prices of mid- and small-cap stocks often fluctuate more than those of large-company stocks.
Investments in stocks issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets, in particular, in countries where market controls may impede investment.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and 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.
U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623.
London Stock Exchange Group companies include FTSE International Limited ("FTSE"), Frank Russell Company ("Russell"), MTS Next Limited ("MTS"), and FTSE TMX Global Debt Capital Markets Inc. ("FTSE TMX"). All rights reserved. "FTSE®", "Russell®", "MTS®", "FTSE TMX®" and "FTSE Russell" and other service marks and trademarks related to the FTSE or Russell indexes are trademarks of the London Stock Exchange Group companies and are used by FTSE, MTS, FTSE TMX and Russell under licence. All information is provided for information purposes only. No responsibility or liability can be accepted by the London Stock Exchange Group companies nor its licensors for any errors or for any loss from use of this publication. Neither the London Stock Exchange Group companies nor any of its licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE Emerging Markets All Cap China A Inclusion Index, FTSE Emerging Markets All Cap China A Inclusion Transition Index or the fitness or suitability of the FTSE Emerging Markets All Cap China A Inclusion Index, FTSE Emerging Markets All Cap China A Inclusion Transition Index for any particular purpose to which they might be put.
Vanguard Marketing Corporation, Distributor.