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Journal Of Indexes
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2007
2007
The Alternative Issue
September / October 2007
|
Vanguard has filed papers with
the Securities and Exchange
Commission (SEC) for the right to
launch a new ETF tied to the MSCI
EAFE index. That index, of course, is
the same one tracked by the $45 billion
iShares MSCI EAFE index (NYSE:
EFA), Barclays Global Investor’s
(BGI’s) flagship ETF and the second
largest ETF in the world.
Vanguard plans to price its ETF very aggressively, charging just 0.15 percent in expenses compared to 0.35 percent for EFA. The Vanguard ETF will trade on the American Stock Exchange (AMEX) under the ticker symbol VEA. It will be called the Vanguard Europe Pacific ETF. The move is part of a broader effort by Vanguard to challenge BGI on the fee front. It made a similar move with its emerging markets ETF last year. The new EAFE ETF will be a share class of the Vanguard Tax-Managed International Fund (VTMGX). That means that VEA and VTMGX will hold the same securities and receive the same returns, before fees. As a tax-managed fund, VTMGX does make trades to lock in capital losses when possible. The impact of these trades, however, has been negligible on performance in recent years. |
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