The best-selling ETF since the end of September is iShares MSCI Emerging Markets (NYSEArca: EEM) with over $2 billion of inflows. The developing market ETF has been gobbling up cash after a rival fund managed by Vanguard announced it was dropping its MSCI tracking index.

EEM, which is sponsored by BlackRock (NYSE: BLK), has gathered $2.2 billion since Sept. 30,according to flow data from IndexUniverse.

Since then, Vanguard MSCI Emerging Markets (NYSEArca: VWO) has seen outflows of $728 million. In early October, Vanguard said it planned to transition its international equity ETFs to FTSE indices as it drops MSCI (NYSE: MSCI) benchmarks. The move will allow Vanguard to lower ETF expense ratios due to cheaper index licensing fees. [Vanguard Index Change Sets Emerging Market ETF Showdown]

Some fund managers benchmarked to MSCI indices have expressed reservations about the index swap, the Financial Times reports. Others are concerned the move may lead to negative tax consequences and costs.

Vanguard points out that its emerging market fund, VWO, offers cost savings for investors and advisors. VWO has an expense ratio of 0.2% compared with 0.67% for the iShares ETF. BlackRock recently launched iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG), which has an expense ratio of 0.18%. [Emerging Market ETF Battle: Vanguard vs. iShares]

Vanguard thinks the FTSE indices offer broad exposure to international markets, and expects long-term licensing arrangements with FTSE will enable it to deliver considerable expense saving over time. [Vanguard Emerging Market ETF Index Switch: What Investors Should Know]

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