Vanguard to Launch Global Stock Index Fund

Posted by Sun on April 2, 2008
Post viewed 1654 times, 11 so far today

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VanguardAccording to a news release, mutual fund giant Vanguard has filed with SEC to offer a new, passive fund that invests in global stock markets. The Vanguard Global Stock Index Fund, which is set to be available for investors in the second quarter this year, tracks the FTSE All-World Index. The index currently covers 48 countries in both the developed and emerging markets and constitutes of more than 2,800 stocks, of which 55% are companies outside the U.S. At the same time, Vanguard also plans to introduce the ETF version of the new fund. The expense ratio of the mutual fund will be 0.45% with a minimum initial investment of $3,000, the same as most Vanguard funds. The cost of the ETF version of the fund will be at 0.25%.

Prior to introduction of this new fund, Vanguard already has funds that cover the U.S. stock market (Vanguard Total Stock Market Index, VTSMX) and stock markets outside the U.S. (Vanguard FTSE All-World ex-US Index Fund, VFWIX). Now investors will have the chance to own the entire global stock markets with a single fund.

Like Vanguard founder John Bogle said before, the best way to invest for small investors is own the entire stock market, then forget about it. That will soon become true. Now I just hope that someone comes up with a global bond fund to make investing really, really simple: a global equity fund and a global fixed income fund and that’s it :)

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14 Comments
April 2, 2008

StateStreet originally filed to have a Global TIPS ETF (WIP) but decided to change at the last minute to International TIPS.

Overseas Vanguard investors with 5M can get into the Global Bond Index. Not sure why they don’t bring this over here.

http://global.vanguard.com/international/hEurEN/invest/fnd_GlobalBndIndex_InsEN.html

Other global stock ETFs:

iShares ACWI uses the MSCI index and should act pretty similar to Vanguard’s FTSE index.

Northern Trust’s upcoming global equity index will use the Dow Jones index which includes midcap and smallcap funds so that option would provide more coverage than both Vanguard’s or iShare’s.

Posted by MossySF
April 2, 2008

So if you own every stock in the world, how do you allocate your portfolio to have Bogle’s recommended 20% intl stocks vs. 80% domestic?

Posted by Jason Unger
April 2, 2008

MossySF: Thanks for the information. I noticed there are some global equity ETFs coming out recently. However, since they all have very short history, this Vanguard fund could be attractive to investors because Vanguard usually has the lowest costs.

Jason: Well, if you decide to invest in this fund, then you don’t have the choice to select the allocation :) Actually, I think what Bogle meant is by owning the entire market you don’t have to worry about which sector performs better and which doesn’t, though his comment is more for individual stocks than an index fund. Given the size of the US economy in the world economy, I think the fund’s 55% allocation of US stocks is appropriate.

Posted by Sun
April 6, 2008

This is pretty cool.

The expense ration of 0.25 is a bit higher than the existing etfs but it’s convenient.

One question I always had about a “all in one” etf is how do you rebalance? Or do you just rebalance between equities and bonds.

Another things is that it’s hard to imagine most people outside the US wanting to have that little invested in their own currency. In Canada I like to have at least 20% in Canadian equities even though that is very much overweight.

Mike

Posted by Four Pillars
April 7, 2008

@Jason:

You could buy both the Total Stock Market Index Fund and the Global Index Fund. To achieve 80/20 distribution of domestic to global, you could allocate your funds like such:

80% = 100% y + 45% x

x + y = 100%

y = 64% TSMIF
x = 36% GSMIF

@Four Pillars:

“One question I always had about a “all in oneâ€? etf is how do you rebalance? Or do you just rebalance between equities and bonds.”

You got it.

Posted by MITBeta @ Don't Feed the Alligators
April 13, 2008

Wow, I did not hear about this! This will actually be great for people who are not really into investing. Simple purchase this fund, a bond index fund, and perhaps a small cap value fund.

Posted by How to Invest
May 15, 2008

Hi,
Vanguard family is one of the top most mutual fund company. Investing in these will be wise investment. Vanguard to Launch Global Stock Index Fund it is a great opportunity for the inverters who want to get the best returns on there investments.

Posted by Good Stock To Invest In
May 16, 2008

Great to hear that vanguard family has started another profit earning option for the investors. Well many inverters might be eager to invest into these funds.

Posted by Best Stocks To Invest In
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