Vanguard completes transition to FTSE benchmarks

3 July 2013

  • FTSE Emerging Transition Index is retired with completion of move of world’s largest emerging market fund, Vanguard Emerging Markets Stock Index Fund, to the benchmark FTSE Emerging Index
  • One of the largest index transitions ever
  • Completion of transition marked final stage in switch to FTSE benchmarks for six of Vanguard’s international equity index funds with total aggregate assets of $209 billion*

FTSE Group (“FTSE”) has announced the retirement of its FTSE Emerging Transition Index following the successful completion last week of the six-month transition of the Vanguard Emerging Markets Stock Index Fund to FTSE’s Emerging benchmark. The $70 billion Vanguard fund and its related exchange traded fund (Ticker: VWO), the world’s largest emerging markets ETF, now track the FTSE Emerging Index, used by investors worldwide to benchmark emerging market equities.

The transition concludes the move of six international Vanguard funds with $209 billion in AUM to FTSE indices, which was first announced on 2 October, 2012. With the completion of the transition, $241 billion in total Vanguard assets now track FTSE benchmarks, approximately 40% of this in ETF products.

The transition of the index for the emerging market fund began in January and was one of the largest index benchmark switches ever. The Vanguard funds previously tracked an emerging markets index that includes a 15% weighting to South Korea. FTSE’s globally recognized country classification system classifies Korea as a developed market and therefore does not include it in its Emerging Index. To ensure a smooth transition and minimize the trading impact, FTSE developed a transition index that gradually managed the Korea weighting down from 15% percent to zero. At the same time, FTSE made the index constituents and weights available, enabling investors to track the changes over the course of the 26-week transition until they matched those of the benchmark FTSE Emerging Index.

Mark Makepeace, Chief Executive of FTSE Group, said: “We are delighted that Vanguard’s transition to our FTSE Emerging Index has been successfully completed. The transition is a great example of how FTSE continually works with partners worldwide to manage benchmark change and deliver comprehensive index solutions.”

*Asset figures are as of 31 May, 2013

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