The change will complete a transition that’s designed to offer investors increased diversification and bring the fund to market-cap weightings. Since December 2015, the $58 billion fund has tracked a transition index while portfolio managers gradually increased exposure to small-cap and Canadian companies and also proportionally reduced the weightings of other equities.
The fund’s new benchmark represents the performance of large-, mid-, and small-cap companies in developed markets, including Canada but excluding the United States. The index comprises approximately 3,700 securities from 24 countries.
The new benchmark’s 10.6% exposure to small-cap stocks moves the fund closer to market-cap weightings while also offering additional diversification. With the addition of Canada, which represents approximately 8.3% of the benchmark, the fund will be the largest market-cap-weighted index fund of its type to offer all-cap exposure to all developed markets outside of the United States*.
The change represents the third of four changes to all-cap benchmarks announced by Vanguard in June 2015. In 2015, Vanguard European Stock Index Fund (VEURX) and Vanguard Pacific Stock Index Fund (VPACX) transitioned to new benchmarks.
The fourth fund, Vanguard Emerging Markets Stock Index Fund (VEIEX), is in the midst of a transition that is adding exposure to China A-Shares as well as small-cap equities.
*Source: Bloomberg, as of April 30, 2016
All asset figures as are of April 30, 2016, unless otherwise noted.
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All investing is 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.
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