September / October 2007
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Vanguard To Launch EAFE ETF
Written by Journal of Indexes Staff   
August 09, 2007 12:00 AM  |  Related ETFs: EFA / VEA

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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Read more on Exchange Traded Fund (ETF), IShares MSCI EAFE Index Fund at Wikinvest
 

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