VALLEY FORGE, PA (September 18, 2016)—Vanguard announced today that the $59 billion Vanguard Emerging Markets Stock Index Fund, including the world’s largest emerging-markets ETF (ticker: VWO), has completed its transition to the FTSE Emerging Markets All Cap China A Inclusion Index, effective with the opening of trading on September 19, 2016.
Since November 2015, the fund has tracked the FTSE Emerging Markets All Cap China A Transition Index, as it gradually built exposure to small-capitalization and China A-shares stocks.
The fund’s new index, the FTSE Emerging Markets All Cap China A Inclusion Index, is a market-cap weighted benchmark representing the performance of large-, mid-, and small-cap companies in emerging markets.1 The index comprises approximately 3,561 securities from 22 countries, including exposure to 1,800 new small-cap stocks and 1,500 new China A-shares stocks.
Vanguard Emerging Markets Stock Index Fund, is the first broad-based, market-cap weighted emerging-markets index fund to offer China A-shares and all-cap exposure.2
Addition of all-cap exposure
The new benchmark’s 11% exposure to small-cap stocks brings the fund closer to full market-cap weightings and offers additional diversification. Improved market conditions have lowered the cost of investing in international small-capitalization stocks, making it an opportune time to provide investors with added exposure to all-capitalization stocks and broader diversification.
Inclusion of China A-shares
Additionally, the new benchmark features 5% exposure to China A-shares stocks. China A-shares are equity shares in mainland China companies that are traded on the Shanghai and Shenzhen stock exchanges and are only available to foreign investors through regulated programs. China A-shares provide investors additional diversification via access to mainland Chinese companies that offer these shares.
China is one of the world’s key emerging economies and the second-largest stock market in the world by market cap. With the world’s second-largest GDP, China accounts for 16% of world GDP and had a 6.3% GDP growth rate through the first half of 2016.3 Vanguard believes access to this key market has the potential to offer significant long-term benefits for investors.
Final benchmark change
This benchmark move represents the last of four transitions to all-capitalization FTSE benchmarks announced by Vanguard in June 2015. Vanguard Developed Markets Index Fund, Vanguard European Stock Index Fund and Vanguard Pacific Stock Index Fund transitioned to their final benchmarks in late 2015 through 2016.
Vanguard is one of the world’s largest investment management companies. As of August 31, 2016, Vanguard managed more than $3.8 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers more than 350 funds to its more than 20 million investors worldwide. For more information, visit www.vanguard.com.
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1 FTSE Emerging Markets All Cap China A Inclusion Index comprises large-, mid- and small-cap securities of the FTSE Emerging All Cap Index and FTSE China A All Cap Index. The weight of the FTSE China A All Cap Index in the FTSE Emerging Markets All Cap China A Inclusion Index will be adjusted by the quota available to international investors.
2 Sources: Bloomberg and Morningstar
3 Sources: Quandl, 2015 and International Monetary Fund, 2016
All asset figures are as of August 31, 2016, unless otherwise noted. Source: Vanguard.
For more information on Vanguard funds, visit vanguard.com, or call 800-662-7447 to obtain a prospectus, or if available, a summary prospectus. Visit our website, call 800-662-7447, or contact your broker to obtain a prospectus, or if available, a summary prospectus for Vanguard ETF Shares. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.
All investments are subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Prices of mid- and small-cap stocks often fluctuate more than those of large-company stocks.
Investments in stocks issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets, in particular, in countries where market controls may impede investment.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623.
London Stock Exchange Group companies include FTSE International Limited ("FTSE"), Frank Russell Company ("Russell"), MTS Next Limited ("MTS"), and FTSE TMX Global Debt Capital Markets Inc. ("FTSE TMX"). All rights reserved. "FTSE®", “Russell®", "MTS®", "FTSE TMX®" and "FTSE Russell" and other service marks and trademarks related to the FTSE or Russell indexes are trademarks of the London Stock Exchange Group companies and are used by FTSE, MTS, FTSE TMX and Russell under licence. All information is provided for information purposes only. No responsibility or liability can be accepted by the London Stock Exchange Group companies nor its licensors for any errors or for any loss from use of this publication. Neither the London Stock Exchange Group companies nor any of its licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE Emerging Markets All Cap China A Inclusion Index, FTSE Emerging Markets All Cap China A Transition Index or the fitness or suitability of the FTSE Emerging Markets All Cap China A Inclusion Index, FTSE Emerging Markets All Cap China A Transition Index for any particular purpose to which they might be put.
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