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moneysense.ca, 3/10/12
Vanguard US ETF Benchmarks are Changing
| Country | FTSE Emerging Index | MSCI EM Index |
|---|---|---|
| China | 16.72% | 17.30% |
| South Korea | 15.40% | |
| Brazil | 16.09% | 13.15% |
| Taiwan | 13.23% | 10.95% |
| South Africa | 10.56% | 8.01% |
Apart from the country weightings, the two emerging market indexes look fairly similar. This might explain the roughly similar risk-reward profile in the annual returns.
| FTSE Emerging Index | MSCI EM Index | |
|---|---|---|
| No. of stocks | 793 | 820 |
| Total Market Cap | $3.3 Trillion | $3.4 Trillion |
| Average Market Cap | $4.2 Billion | $4.1 Billion |
| Median Market Cap | $1.8 Billion | $2.0 Billion |
In future posts, we’ll take a look at the impact of the benchmark change on the Developed Market ETF and the US Total Stock Market ETF.
moneysense.ca, 3/10/12
Great post CC.
I own VTI, VEA and VWO. Lately they`ve been sending me their prospectus in the mail and I`ve been wondering why.
Maybe I should read them.
Thanks for your comment Andrew. The stuff Vanguard sent you in the mail is probably their quarterly report. I find it useful to at least glance through it. It has useful data such as p/e ratio, p/b ratio, dividend yields etc. I guess Vanguard would send out documentation of the benchmark change soon as well. The tldr; version of the change is that as far as I can tell, investors can safely ignore it!
Great news. Will include this week in my roundup CC.
Great to read ETFs I own (VTI and VWO) could be lowering MER; the turnover from this type of transition should be a minor concern to most individual investors I would suspect.
Nice to see VWO returning quarterly distributions as well.
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One of the reasons I wanted to invest in the MCSI index tracking funds was for its strong weighting in South Korea. Not necessarily low correlation to NA, EAFE, but strong growth prospects in that country. Oh well, time will tell whether it is provides sufficient diversification from developed markets.
It appears that FTSE reclassified South Korea as “developed” just 3 years back. The country is on the upgrade watchlist of MSCI as well. Korea makes up 5.5% of the Developed market index, so assuming an investor has proportionally more allocated to developed markets compared to emerging markets, Korea’s allocation will remain roughly the same.
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