Yahoo Finance World's Largest EM ETF Changes Index
Vanguard, the world’s biggest mutual fund company, has decided to move away from some MSCI indices in favour of benchmarks run by competing index provider FTSE, in a move motivated in part by index licensing costs. The move will involve the US$67 billion Vanguard MSCI Emerging Markets ETF (NYSEArca: VWO), the world’s largest emerging market equity tracker fund.
Vanguard’s switch affects six international equity funds that had total assets of US$170 billion as of Aug. 31, FTSE said today in a press release, noting the transaction was the largest ever international index provider switch.
The funds will change to benchmarks in the FTSE Global Equity Index Series, replacing MSCI, and VWO and the index mutual fund of which it is part will be based on the FTSE Emerging Index, FTSE said.
The agreement builds on a pre-existing relationship between Vanguard and London-based FTSE. Vanguard currently uses FTSE benchmarks on more than 20 index portfolios around the world, with total assets of US$26 billion.
One executive at a European exchange-traded fund provider, who preferred to remain anonymous, commented: "Given the size of VWO, even a 1bp cut in annual index licensing fees represents $7 million in savings for the fund and its investors, and the cut may well have been more than that in practice. It's also good to see increasing competition between index providers, who have often behaved as an oligopoly when licensing their indices."
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