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Rating:Institutional Investors Pull $887MM from a Vanguard ETF Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, December 05, 2012

Institutional Investors Pull $887MM from a Vanguard ETF

News summary by MFWire's editors

It was clear when Vanguard [profile] announced its indexer switch from MSCI to FTSE that it would lose some institutional investors who were committed to the MSCI index.

And now the bill is in: the Vanguard MSCI Emerging Markets ETF saw $887 million in redemptions in November, according to Bloomberg's Christopher Condon.

Meanwhile, BlackRock's [profile] iShares MSCI Emerging Markets Index ETF took in $2.34 billion last month, Condon writes. The Vanguard ETF holds $57 billion and the iShares ETF $41 billion.

According to a Vanguard spokesman, these redemptions were expected.

"We anticipated a certain amount of leakage of assets," the spokesman told Bloomberg. "However, we're willing to sacrifice short-term cash flow to lower costs for all of our index-fund shareholders."

The change from MSCI to FTSE has a particular impact on emerging markets, since the two indexers use different criteria to determine a country's status -- South Korea, for instance, is a developed market according to FTSE, but an emerging market under MSCI's methodology.

The next few months may test Vanguard's management's sangfroid, as the switch from MSCI has not even gone into effect yet. The Bloomberg piece says that the firm will begin switching to FTSE in January. 

Edited by: Chris Cumming


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