Vanguard to Put Out Small Cap International Index

The Vanguard Group announced its intention to offer its first international small-cap index fund.

A Vanguard news release said the Vanguard FTSE All-World ex-US Small-Cap Index Fund will offer three share classes (Investor, Institutional, and ETF) and is expected to be available in the first quarter of 2009.

The target benchmark for the fund is the FTSE Global Small Cap ex US Index, a market-capitalization-weighted index of stocks traded on markets outside the United States, the investment firm said. The fund will invest in a broadly diversified sampling of securities from the benchmark, which comprises more than 3,300 stocks of companies in 47 countries.

The fund’s ETF Shares have an estimated expense ratio of 0.38%. The Investor Shares, which will require a $3,000 minimum initial investment, have an estimated expense ratio of 0.60%, while the Institutional Shares have an estimated expense ratio of 0.35% and a $5 million minimum initial investment requirement.

To help defray the transaction costs associated with investing in small-cap international stocks, the fund will assess a 0.75% fee on purchases and redemptions of the Investor and Institutional Shares, Vanguard said.