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.
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.