Vanguard FTSE All-World ex-US Small-Cap Index Fund

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The Vanguard FTSE All-World ex-US Small-Cap Index Fund is Vanguard's sole international small cap index fund.

According to Vanguard:

The fund employs a “passive management”—or indexing—investment approach designed to track the performance of the FTSE Global Small Cap ex US Index. The index includes approximately 3,300 stocks of companies in more than 46 countries from both developed and emerging markets around the world. The fund invests in a broadly diversified sampling of stocks in the index that approximates the index’s key risk factors and characteristics.

According to FTSE:

The FTSE Global Small Cap Index Series provide investors with unparalleled access to over 4,600 liquid small cap stocks across 48 countries. The indices capture the bottom 10% of seven regional markets in the FTSE Global Equity Index Series (which covers Large, Mid and Small Cap). The flexible structure of global, regional and country small cap indices provides asset managers with the ability to meet any mandate. The FTSE Global Small Cap Index Series are formed from the wider FTSE Global Equity Index Series. The same methodology is applied to a single global universe to ensure there is no double counting of stocks allowing you the flexibility to manage small cap discretely or as part of your broader benchmark.

Share classes

Three share classes are available:

  • Investor (VFSVX), an initial minimum investment of $3,000.
  • ETF (VSS) with no minimums, though transaction costs apply in buying and selling through a brokerage
  • Institutional (VFSNX) with an initial minum of $5,000,000

Total costs of the ETF and open-end classes may be compared via this Vanguard calculator.

Advantages

Broad coverage

The fund contains both developed and emerging market stocks, which is the first of its kind. In addition, the broad index should make the fund relatively tax efficient and thus suitable for taxable accounts.

Criticisms

Expense ratio

The current expense ratio of the fund is somewhat high by Vanguard standards. Vanguard raised the expense ratio from 0.60% to 0.78% on the fund shares on 12/30/2009, although it has subsequently fallen back to 0.45% (as of 02/28/2013[1]), and then step-by-step down to 0.27% as of 02/24/2017. Vanguard International Explorer Fund (VINEX) gives you access to a similar asset class at an expense ratio of 0.41% as of 02/24/2017 although the fund is less diversified, i.e. contains fewer stocks from less countries (e.g. developed only, no emerging country), and is subject to style drift into mid cap stocks. In addition, International Explorer Fund's turnover rate may make it unsuitable for a taxable holding.

Fees

Vanguard has a history of reducing, and eventually eliminating, the transaction fee as fund net assets increase. [2]

Total market replication

Investors wishing to replicate the Total International Market, should hold this fund in a 1:9 ratio with Vanguard FTSE All-World ex-US Index Fund.

History

  • On February 24, 2017, Vanguard lowered the expense ratio to 0.27% on the fund shares.[3]
  • On July 25, 2014, Vanguard eliminated the purchase and redemption fee of the investor share class, which previously were 0.25% for all purchases and redemptions, reduced from 0.50% in October 2013.[4]
  • On October 16, 2013, Vanguard lowered the purchase and redemption fees to 0.25% on fund shares.
  • On February 28, 2013, Vanguard lowered the expense ratio to 0.45% on the fund shares. See the statutory prospectus for more information.
  • On February 28, 2012, Vanguard lowered the expense ratio to 0.48% on the fund shares.
  • On December 30, 2009, Vanguard raised the expense ratio from 0.60% to 0.78% on the fund shares.
  • April 2, 2009 - fund inception date.
  • On December 11, 2008, Vanguard announced the filing of a registration statement for the fund with the SEC.

See also

Notes