In light of Vanguard’s major index swaps for its exchange traded fund products, investors have begun to take greater notice of how their ETF products are melded together.
Vanguard recently announced plans to swap from major MSCI indices for FTSE and CRSP indices in an attempt to lower costs. More importantly, the switch also changes the ETFs’ underlying holdings. [ETFs Target Indices to Lower Fees Even More]
“We expect that the change will force investors to review specific country exposures across international indexes and it could lead to a meaningful divergence of returns versus the more established competing MSCI index,” Daniel Weiskopf, Principal at Global ETF Strategies, said in a research note. [Vanguard Index Trade ‘All About Costs’]
Specifically, Weiskopf notes that investors, advisors and portfolio managers “will now be forced to define ‘how they define a country as Developed, Developing and Emerging.'”