In the WSJ story, Vanguard principal Joel Dickson said the company’s move prompted “some pushback” from customers, but says the new licensing deal lowers costs. He added that investors who still want exposure to South Korea can buy Vanguard’s developed-markets ETF.
The Vanguard ETF remains the largest emerging market fund with $59 billion compared with $45.2 billion for EEM, according to XTF.
On Oct. 2, Vanguard said it would drop MSCI indices at 22 of its ETFs and substitute two other index providers, in the belief that by doing so it could achieve “considerable savings for the funds’ shareholders over time,” Institutional Investor reports.
Vanguard has played the index transition schedule close to the vest.
“We’re not saying exactly when the transitions will begin in order to prevent front-running,” Vanguard’s Dickson told Institutional Investor. “The transitions will be staggered over several months,” while the VWO change “will take longer than the other funds because it will be divesting all of its holdings in South Korea and investing the proceeds in some markets that are less liquid.”
Full disclosure: Tom Lydon’s clients own EEM.