One of the most popular ETFs in early 2013, Vanguard FTSE Emerging Markets (NYSEArca: VWO), has started its two-step transition to a new target index that was originally announced in October.

The fund now tracks a temporary FTSE benchmark, the FTSE Emerging Transition Index, and will complete the transition to its permanent benchmark later this year, Vanguard said.

VWO had originally tracked the same index as competitor iShares MSCI Emerging Markets (NYSEArca: EEM). [Emerging Markets ETFs Set Pace for S&P 500]

EEM has attracted inflows of $3.3 billion so far in 2013, while VWO has gathered $839 million, according to IndexUniverse data. [Investors Flocking to Emerging Market ETFs Amid Rally]

In October, Vanguard said it planned to change the tracking benchmarks for 22 Vanguard funds and ETFs tied to indices managed by MSCI. They will move to benchmarks provided by FTSE and the University of Chicago’s Center for Research in Security Prices (CRSP). [Emerging Market ETF Battle: Vanguard vs. iShares]

“The transition from the previous benchmarks for these funds is being staggered over a number of months, with completion expected by mid-2013,” Vanguard said in a recent statement.

The fund giant says it has struck deals with FTSE and CRSP that will result in lower index-licensing fees, and the savings will be passed along to fund and ETF shareholders.

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