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Vanguard Debuts Global Property ETF
November 1, 2010
SAN DIEGO (ETFguide.com) – Vanguard has just introduced a new exchange-traded fund (ETF) called the Vanguard Global ex-U.S. Real Estate Index Fund (NasdaqGM: VNQI).
VNQI is linked to the S&P Global ex-U.S. Property Index and it will invest in real estate investment trusts (REITs) and real estate operating companies (REOCs) in emerging markets along with developed markets outside the United States. The new global property ETF will complement the Vanguard REIT Index Fund (NYSEArca: VNQ), which holds domestic real estate securities.
Vanguard offers the following four share classes of the Global ex-U.S. Real Estate Index Fund: Investor Shares (with an estimated expense ratio of 0.50%); Institutional Shares (0.30%); Signal Shares (0.35%); and ETF Shares, ticker symbol VNQI (0.35%). Also, the Valley Forge, PA-based mutual fund giant assess purchase and redemption fees of 0.25% on non-ETF shares to defray the transaction costs and taxes associated with buying and selling foreign real estate securities.
According to Lipper, international real estate mutual funds have an asset-weighted expense ratio of 1.31% on average.
“Modest exposure to real estate investments in a broadly diversified investment portfolio can help moderate overall portfolio volatility and serve as a hedge against inflation,” said Vanguard’s chief investment officer Gus Sauter. “With international real estate securities representing a growing portion of the overall real estate market, a counterpart to our domestic REIT Index Fund is a natural addition to our index fund lineup.”
VNQI’s underlying benchmark is a free-float-adjusted, market-capitalization-weighted index that measures the equity market performance of 425 international real estate securities from 35 developed and emerging markets.
REITs and REOCs are companies that purchase office buildings, hotels, and other real estate property. These securities offer investors an alternative to direct ownership of real estate properties. Since REITs and REOCs often perform differently than the overall equity and fixed income markets, they may offer some diversification to a portfolio already made up of stock and bond funds.
At the end of September, Vanguard managed $125.87 billion in 62 ETFs.
In other ETF news, the PIMCO Broad US Treasury Index Fund (NYSEArca: TRSY) was introduced last week.
TRSY follows the BofA Merrill Lynch US Treasury Index and the average duration of bonds within the fund is currently 7.047 years.
The fund’s annual expense ratio is 0.15%.
PIMCO manages $1.30 billion in ETF assets. |
