] drops index provider MSCI
from more than half a trillion in assets, the cost-savings for mutual fund shareholders will be long-term, not immediate.
Vanguard officially revealed
the switch yesterday, and MSCI's stock price fell
The Malvern, Pennvsylvania-based mutual fund giant's chief investment officer, Gus Sauter
that tidbit yesterday in a video interview with Vanguard public relations principal Rebecca Katz [see the video here
and the transcript here
Sauter confirmed that Vanguard will the "first commercial index client" for the 52-year-old University of Chicago Center for Research in Security Prices (CRSP
). CRSP's indexes will power 15 U.S. stock and balanced index funds, while FTSE
indexes will power six international stock index funds. Several other Vanguard funds already use FTSE indexes.
The switch away from MSCI, Sauter said, "boils down to both cost and construction."
"We expect the move will result in considerable savings to our investors over time," Sauter told Katz, noting that the new deals with CRSP and FTSE are long-term. "There will be no immediate impact on the funds' expense ratios, but the change will provide long-term cost savings and long-term cost certainty."
Sauter also confirmed that, since FTSE classifies Korea as a developed market and not an emerging one, over the next 25 weeks, Vanguard's Korean exposure will shift from its Emerging Markets Index Fund
to developed markets offerings.
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