Products April 2, 2008

New Vanguard Fund Goes Global

Vanguard has filed a registration statement with the Securities and Exchange Commission for the firm’s first passively managed global index fund.
Reported by
The Vanguard Global Stock Index Fund will offer three share classes – Investor Shares, Institutional Shares, and ETF Shares – that are expected to be available in the second quarter of 2008.
The new fund will seek to track the performance of the FTSE All-World Index, a float-adjusted, market-capitalization-weighted index designed to measure the equity market performance of large- and mid-capitalization stocks worldwide. The fund will invest in a broadly diversified sampling of securities from the target benchmark, which comprises more than 2,800 large- and mid-cap stocks of companies in 48 countries, according to Vanguard. Approximately 55% of the index is made up of stocks from outside the United States.
The fund’s ETF Shares have an estimated expense ratio of 0.25%. The fund’s Investor Shares, which will require a $3,000 minimum initial investment, have an estimated expense ratio of 0.45%, and the Institutional Shares, with a $5 million minimum initial investment requirement, have an estimated expense ratio of 0.20%.
To offset the transaction costs associated with global investing and to protect the interests of long-term shareholders, the fund will assess a 0.15% purchase fee on all non-ETF share purchases and a 2% redemption fee on all non-ETF assets redeemed within two months of purchase, according to the announcement.
Three Vanguard funds currently track FTSE benchmarks:
  • Vanguard FTSE Social Index Fund,
  • Vanguard High Dividend Yield Index Fund, and
  • Vanguard FTSE All-World ex-US Index Fund.
Diversions April 2, 2008

Graduation Dazed?

This spring, 3.33 million students will graduate from high school, the largest class in American history.
Reported by
For those with a student in that group, it may be too late – but Kiplinger has unveiled an educational video on paying for college and how to borrow wisely titled “Borrow Smart.’ The 24-minute video first offers tips on saving, keeping costs low, and accessing scholarships and grants. Kiplinger experts then advise families on how, when necessary, they can borrow wisely to make the investment in a college education.
The film, written by and featuring editors of Kiplinger’s Personal Finance magazine, was underwritten by Sallie Mae (which describes itself as “the nation’s leading saving- and paying-for college company’) champions its “1-2-3 approach’ to paying for college:
  • first, tap “free money’ such as grants and scholarships;
  • second, fully exhaust federal loans;
  • third, fill any gap with private education loans.
Late Starts?
According to Sallie Mae’s 2007 Survey of Parents of College-Bound Freshmen, 61% of all parents of incoming college freshmen said that they began initial discussions about the best way to pay for college after the child entered high school.
The College Board reports that the average cost of a four-year public college in 2007-2008 was $13,589 and the average cost of a four-year private college was $32,307. One-third of all college graduates finish with no debt. The other two-thirds who borrowed finished school with an average of $19,200 in student loans.
Video Details
According to the announcement, the video is a highlight of the “Paying for College’ section of the Kiplinger Web site at www.kiplinger.com/money/payingforcollege. Sallie Mae is also making it available to families across America via its Web site at www.salliemae.com/kiplinger.
The video is accompanied by a downloadable guide, including discussion questions for parents and students to use as they talk about how to pay for college.

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