Vanguard today announced plans to expand its index fund family, introducing 19 new funds with ETF Shares to provide investors with additional low-cost stock and bond choices. The firm will also launch ETF Shares of its flagship Vanguard 500 Index Fund. The new ETFs will feature expense ratios that are substantially below those of competing products. (Source: Morningstar, 3/31/2010).
Over the next year, these new funds and 20 new ETFs will broaden the firm’s equity lineup with core funds tracking benchmarks from a wider range of providers; add indexed municipal products to Vanguard’s fixed income stable; and present investors with the option of an international real estate fund and ETF.
“We recognize that institutional investors and financial advisors may have a preference for certain benchmarks, and our goal is to offer them best-in-class funds and ETFs based on a choice of leading index providers, including FTSE, MSCI, Russell, and S&P,” said Vanguard CEO Bill McNabb. “Vanguard’s focus has been on developing a full array of stock and bond funds and ETFs to cover domestic and international markets and market segments. We are taking this logical next step to provide multiple options within the domestic stock markets and more choice for bond investors.”
On the equity side, Vanguard is adding a suite of seven funds with ETF Shares to offer exposure to value, growth, and blend segments of the U.S. stock market based on the large cap Russell 1000® Index and small cap Russell 2000® index series. A broad market fund and ETF seeking to track the Russell 3000® Index will also be offered. In addition, Vanguard will complete its S&P lineup with eight new equity funds and ETFs targeting the growth and value segments of the S&P 500 Index and the growth, value, and blend segments of the S&P MidCap 400 and SmallCap 600 Indexes.
On the bond side, Vanguard will offer three new municipal bond index funds with traditional and exchange-traded shares, tracking benchmarks in the S&P National AMT-Free Municipal Bond Index series.
The new real estate fund will be benchmarked to the S&P Global ex-U.S. Property Index. Vanguard Global ex-U.S. Real Estate Index Fund will offer Investor Shares, Institutional Shares, Signal Shares, and ETF Shares.
Registration statements for the 19 new funds and ETFs, and the Vanguard S&P 500 ETF were filed with the SEC today.
Vanguard pioneered index investing for individuals in 1976 with the launch of the Vanguard 500 Index Fund, which now has $91 billion in net assets. The company launched its first ETF in 2001—Vanguard Total Stock Market ETF (ticker: VTI), which is now one of the largest ETFs in the market with $14 billion in net assets. In the past year, Vanguard’s ETF assets under management have more than doubled, rising from $50 billion to more than $100 billion across its lineup of 46 bond and stock ETFs, and Vanguard currently captures one out of every two dollars flowing to ETF products (source: Bloomberg, 05/31/2010).
VANGUARD’S NEW FUNDS AND ETFs
Over the next year, Vanguard will launch 19 mutual funds with ETF Shares and an S&P 500 ETF, for a total of 20 new ETFs. Like Vanguard’s other funds and ETFs, the new offerings will feature some of the lowest costs in the industry. The average expense ratio of Vanguard’s existing ETFs is 0.18%, compared with the industry average of 0.52%. The average expense ratio of Vanguard’s mutual funds is 0.23%, versus the industry average of 1.19% (source: Lipper Inc., 12/31/2009).
|Estimated Expense Ratios|
|Vanguard S&P 500 ETF (new) / Vanguard 500 Index Fund (existing)||0.06%||0.05%||*||0.18%||0.07%||0.07%|
|Vanguard S&P 500 Value Index Fund||0.15%||0.08%|
|Vanguard S&P 500 Growth Index Fund||0.15%||0.08%|
|Vanguard S&P Mid-Cap 400 Index Fund||0.15%||0.08%|
|Vanguard S&P Mid-Cap 400 Value Index Fund||0.20%||0.08%|
|Vanguard S&P Mid-Cap 400 Growth Index Fund||0.20%||0.08%|
|Vanguard S&P Small-Cap 600 Index Fund||0.15%||0.08%|
|Vanguard S&P Small-Cap 600 Value Index Fund||0.20%||0.08%|
|Vanguard S&P Small-Cap 600 Growth Index Fund||0.20%||0.08%|
|Vanguard Russell 1000 Index Fund||0.12%||0.08%|
|Vanguard Russell 1000 Value Index Fund||0.15%||0.08%|
|Vanguard Russell 1000 Growth Index Fund||0.15%||0.08%|
|Vanguard Russell 2000 Index Fund||0.15%||0.08%|
|Vanguard Russell 2000 Value Index Fund||0.20%||0.08%|
|Vanguard Russell 2000 Growth Index Fund||0.20%||0.08%|
|Vanguard Russell 3000 Index Fund||0.15%||0.08%|
|Vanguard Short-Term Municipal Bond Index Fund||0.12%||0.12%|
|Vanguard Intermediate-Term Municipal Bond Index Fund||0.12%||0.12%|
|Vanguard Long-Term Municipal Bond Index Fund||0.12%||0.12%|
|Vanguard Global ex-U.S. Real Estate Index Fund||0.35%||0.30%||0.50%||0.30%|
*Institutions are eligible for the Vanguard Institutional Index Fund, which tracks the S&P 500 Index.
* Trading limits and fund expenses may apply. See the Vanguard Brokerage Services® commission and fee schedule for full details.
- All mutual funds and ETFs are subject to market risk, which may result in the loss of principal. Prices of mid- and small-cap stocks often fluctuate more than those of large-company stocks. Foreign investing involves additional risks including currency fluctuations and political uncertainty. Funds that concentrate on a relatively narrow market sector face the risk of higher share-price volatility. Investments in bond funds are subject to interest rate, credit, and inflation risk. Although the income from a municipal bond fund is exempt from federal tax, you may owe taxes on any capital gains realized through the fund’s trading or through your own redemption of shares. For some investors, a portion of the fund’s income may be subject to state and local taxes, as well as to the federal Alternative Minimum Tax.
- Vanguard ETFs are not redeemable with an Applicant Fund other than in Creation Unit aggregations. Instead, investors must buy or sell Vanguard ETF Shares in the secondary market with the assistance of a stockbroker. In doing so, the investor will incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
- U.S. Pat. No. 6,879,964 B2; 7,337,138.
- A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
- For more information about Vanguard funds, visit www.vanguard.com, or call 800-662-7447, to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. Copies of the final prospectus can be obtained from Vanguard. Please note that a preliminary prospectus is subject to change.
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