OREANDA-NEWS. December 24, 2015. All share classes of Vanguard Developed Markets Index Fund will begin tracking a new FTSE transition index that over time will build exposure to small-capitalization and Canadian equities.

The fund is moving to the FTSE Developed All Cap ex US Transition Index from the FTSE Developed ex North America Index as part of a benchmark change that will broaden the fund's diversification and move investors closer to market-cap weightings.

The transition index will be used for approximately six months to reduce the costs associated with trading large amounts of securities in a short period. The fund will sell large-cap and mid-cap equities while proportionally adding exposure to small-cap and Canadian equities based on each security's weight in the transition index (see chart below).

At the end of the transition period, the fund will begin tracking the FTSE Developed All Cap ex US Index, which included 2,270 small-cap companies (10.3% of the index) and 229 Canada stocks (7.40% of the index) as of November 30.

With the addition of small-cap and Canadian equities, the Developed Markets Index Fund will be the largest market-cap-weighted index fund to offer all-cap exposure to all developed markets outside the United States.1 The benchmark change isn't expected to affect the fund's expense ratios.

To view monthly updates of the transition index's composition and other benchmark details, visit FTSE's Vanguard portal.

Vanguard announced the Developed Markets Index Fund transition earlier this year, along with changes to three other U.S.-domiciled international equity index funds. Two of the funds, Vanguard European Stock Index Fund and Vanguard Pacific Stock Index Fund, began tracking all-cap equity indexes on October 1. The fourth, Vanguard Emerging Markets Stock Index Fund, moved to a transition index that includes exposure to small-cap equities and China A-Shares on November 2.

1 Sources: Bloomberg, as of September 30, 2015.

Notes:

  • All investing is subject to risk, including the possible loss of the money you invest.
  • Diversification does not ensure a profit or protect against a loss.
  • Investments in stocks issued by non-U.S. companies are subject to risks including country/regional risk and currency risk.
  • Prices of mid- and small-cap stocks often fluctuate more than those of large-company stocks.