The move is part of a change to 22 funds in total, over the next couple of months, the rest of which will switch from MSCI to University of Chicago’s Centre for Research in Security Prices (CRSP).
This change will affect both mutual funds and ETFs and according to Vanguard ‘should save millions of dollars in licensing expenses for the funds’.
"With our clients’ best interests in mind we negotiated licensing agreements for these benchmarks that we expect will enable us to deliver significant value to our index fund and ETF shareholders and lower expense rations over time," said Vanguard’s chief investment officer Gus Sauter.
He said the long-term nature of these licensing agreements would hold the costs steady, an advantage in today’s environment when such fees are generally on the rise.
The changes will effect six international funds (switching to FTSE) and 16 US funds (changing to CRSP)and Vanguard said that while the specific assets held by the funds might shift, the objectives will remain the same and so the funds will continue to play the role in portfolios they have been selected for.
But an analyst note from Morgan Stanley commented that a big shift will be seen in funds using the MSCI EM index which are moving onto the FTSE EM index.
This is because MSCI includes Korea as an EM country whereas FTSE does not, and Korea represents 15% of the MSCI EM. This means the Vanguard MSCI Emerging Market ETF will have a significant change in underlying assets, something to think about for those who own it or might be interested in owning it.
