New Vanguard Global Index ETF

[HotRod140]

Hey Guys Does anyone know the date when we may invest in the new Vanguard Global Index Etf. Also does anyone have any thoughts about the fund?

[Pangloss]

I haven't even heard about this fund! What else do you know about it?

[Pangloss]

http://www.sec.gov/Archives/edgar/data/857489/000093247108001029/intleqglobalrefile485a.txt

"The Fund attempts to track the investment performance of a benchmark index
consisting of common stocks of large- and mid-capitalization companies located
around the world, including developed and emerging markets. The Fund's
investment in the Index will be within the capitalization range of the companies
included in the FTSE All-World Index ($xx million to $xxx billion as of February
29, 2008). The Index includes approximately 2,900 stocks of companies located in
48 countries, including both developed and emerging markets. As of February 29,
2008, the largest markets covered in the Index were the United States, the
United Kingdom, Japan, France, and Germany (which made up approximately 41%, 9%,
9%, 5%, and 4%, respectively, of the Index's market capitalization). The Fund
typically holds xxxx-xxxx stocks in its target Index (covering nearly xx% of the
Index's total market capitalization) and a representative sample of the
remaining stocks."

Very nice.

[DaveTH]

The most recent prospectus is dated June 17, 2008 so I suspect that it will launch close to that date:

http://www.secinfo.com/dSeJx.t11j.htm

BTW, they have changed the name to the Vanguard Total World Stock Index (fund/ETF)

[shawcroft]

I must admit to be intrigued by this concept and offering......I will await erudite commentary regarding its "fit" within the core fund strategies.
Shawcroft

[Bob]

If I read the prospectus correctly, the expected ER of 0.45% seems expensive compared to what one would pay (overall) buying the separate US, FTSE ex US, and Emerging Markets ETFs.

Is this right? If so, why would one want to go this way versus buying the separate funds that average out at about a 0.2 or less ER?

[HotRod140]

You know what Bob, what you say makes sense. Does any of the veteran Bogleheads agree with Bob's Point?

[Sphinx]

If I read the prospectus correctly, the expected ER of 0.45% seems expensive compared to what one would pay (overall) buying the separate US, FTSE ex US, and Emerging Markets ETFs.

Is this right? If so, why would one want to go this way versus buying the separate funds that average out at about a 0.2 or less ER?

Close. The mutual fund will have an expense ratio of 0.45% and a purchase fee of .15%. The ETF will have an expense ratio of 0.25%.

I'm thinking of buying the mutual fund in my taxable account this June. It has no small-cap exposure, but I'm attracted to a fund that never needs to be rebalanced between domestic and international.

[MossySF]

I'm thinking of buying the mutual fund in my taxable account this June. It has no small-cap exposure, but I'm attracted to a fund that never needs to be rebalanced between domestic and international.

If you buy 2 different funds/etfs at the domestic / international cap weight %, you should never have to rebalance eitherr since growth / decrease would match the same percentage in a global fund.

Unless the US invades some countries overseas (or vice versa) and 2 stock markets get combined ... in that case, you'd have to rebalance.

[Newboglehead]

Coincidentally, Chharles Ellis was a guest on Consuelo Mack's investment show seen on PBS stations in the New York area, and when asked what would be the one single must-have investment he'd recommend, his reply was a global equity index fund.

[yobria]

Hmm I think I'll keep my US and foreign stock investments separate. Allows some bubble proofing, and would I feel comfortable if, say, EM becomes a greater share of my investments than my US allocation? When you invest in a foreign company, you are quite literally putting your savings in an envelope and mailing it to that country, hoping to get it back someday. Of course you probably will, if that country doesn't decide to hang on to it.

Nick

[OptionAl]

No small cap, not so good.

[mpt follower]

Nick, please forgive me for saying that your comments are extremely narrow minded. I must tell you that there is a world outside the USA and that in some aspects that world is doing better than the USA. Have you been to Europe or Asia lately? Trust me, in less time than you think you will be forced to change your opinion, otherwise you run the risk of being stuck at a low return on your money. The growth is shifting somewhere else, not unlike what happened in the USA 30-40-50 years ago.
Erwin

[stan1]

I don't like the fact that the fund is going to use sampling. It is not going to hold most of the ~2800 companies in the index. The minimum percentage is shown as an XX in the SEC prospectus. The new fund could hold under 2000 companies. We have seen that iShares ETFs such as EEM have underperformed Vanguard counterparts like VWO partly because of sampling error.

Holdings:
Total Stock Market -- 3521 companies
FTSE All World Ex US -- 2204 companies
====== 7725 companies

Why would I chose to go with something that holds 1/3 or possibly even 1/4 the number of companies? It's not sufficiently diversified, and to me the sampling risk is unacceptable and can be mitigated by using other implementation choices.

Second reason I'm not planning to use it is that I think there is too much currency risk in a single fund approach. Currency fluctuations have high potential to generate bubbles (witness Yen, Euro, and Dollar over the past 25 years). I don't want to be buying high and selling low. I'd rather rebalance between asset classes where I am selling high and buying low.

[edge]

Vanguard has typically held the largest number of holdings in their sampled products. I do not see why this would be any different.

[ken250]

Now investors can buy high globally in just a single stock fund.

[edge]

FUD

Now investors can buy high globally in just a single stock fund.