OREANDA-NEWS. June 07, 2016. The \\$58 billion Vanguard Developed Markets Index Fund will begin tracking a new index that includes small-capitalization and Canadian equities, effective with the start of trading on June 1, 2016. The move completes a previously announced transition that brings the fund closer to market-cap weightings and offers increased diversification to investors.

The fund's new benchmark, the FTSE Developed All Cap ex US Index, represents the performance of large-, mid-, and small-cap companies in developed markets—including Canada but excluding the United States.

The fund had tracked a transition index since December 2015 while its portfolio managers gradually increased exposure to small-cap and Canadian equities and proportionally reduced the weightings of other equities:

Benchmark transition timeline
Effective 6/1/2016Effective 12/21/2015Before 12/21/2015
FTSE Developed All Cap ex US IndexFTSE Developed All Cap ex US Transition IndexFTSE Developed ex North America Index

As of April 30, 2016, the new benchmark represented approximately 2,248 small-cap companies (10.6% of the index) and 216 Canadian companies (8.3% of the index). With the addition of small-cap and Canadian equities, the fund is the largest market-cap-weighted index fund with all-cap exposure to all developed markets outside the United States1. The benchmark change isn't expected to affect the fund's expense ratios.

Altogether, the new index comprises approximately 3,700 securities from 24 countries.

Vanguard announced in June 2015 that the Developed Markets Index Fund and three other U.S.-domiciled international equity index funds would move to all-capitalization strategies. Two of the funds, Vanguard European Stock Index Fund and Vanguard Pacific Stock Index Fund, began tracking all-cap equity indexes on October 1, 2015. The fourth, Vanguard Emerging Markets Stock Index Fund, is in the midst of a transition that is adding exposure to China A-Shares as well as small-cap equities.

Additional information including performance returns, weights, and constituent-level data for the former, destination, and transition indexes is available on FTSE's Vanguard portal.

1 Source: Bloomberg, as of April 30, 2016.

Notes:

  • All asset figures as are of April 30, 2016, unless otherwise noted.
  • All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Prices of mid- and small-cap stocks often fluctuate more than those of large-company stocks.
  • Investments in stocks issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets and, in particular, in countries where market controls may impede investment.