Vanguard Group is planning an exchange traded fund (ETF) split, slicing shares of three of its most popular funds in half. This move could be an attempt to capture more market share, appeal to the smaller investor by touting a low price, and make the funds look heavily traded. The three ETFs that will split like an amoeba:
- Vanguard Total Stock Market (VTI) $10.6 billion in assets; current price $140.60
- Vanguard Emerging Markets (VWO) $7.5 billion; current price $102.40
- Vanguard Extended Market (VXF) $559 million; current price $106.60
After the 2-for-1 split, investors in the funds will receive an extra share for every one they own, however, the price of each share will drop in half, so actual value of overall holdings aren’t different, reports Ian Salisbury for The Wall Street Journal.
Salisbury gives an example: Shares of VTI are about $138, meaning that is the minimum investment for any investor who wants to buy a share of the fund, and the smallest increment in which existing investors can buy and sell. After the split, the new number should be closer to $69.
The split is aiming to help smaller investors buy and trade in smaller amounts, increments that are more affordable. Vanguard is also trying to keep up with the competition, Barclays’ iShares and State Street’s SPDRs.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.