Vanguard Institutional Total Stock Market Index and Balanced Index Funds Transition to New CRSP Index
In October 2012, Vanguard announced that 22 stock and balanced index funds would begin tracking new indexes in 2013. Effective with the opening of trading at 9:30 a.m. Eastern time on January 15, 2013, Vanguard Institutional Total Stock Market Index Fund and the equity portion of Vanguard Balanced Index Fund will seek to track the CRSP US Total Market Index.
The Institutional Total Stock Market Index Fund previously had sought to track the MSCI US Broad Market Index. For the equity portion (60%) of the Balanced Index Fund, the CRSP US Total Market Index replaces the MSCI US Broad Market Index. The fixed income portion (40%) of the Balanced Index Fund remains with Barclays U.S. Aggregate Float Adjusted Index.
The CRSP US Total Market Index represents nearly 100% of the investable U.S. stock market, covering mega-, large-, mid-, small-, and micro-cap stocks regularly traded on NYSE, NYSE MKT, NASDAQ and ARCA.
The expense ratio for each share class of the Institutional Total Stock Market Index Fund has declined by 0.007% because the fund no longer owns business development companies (BDCs), which are excluded from CRSP Indexes. BDC expenses are required to be included in the expense ratio of any fund that owns them in an item labeled “acquired fund fees and expenses (AFFE).” The projected expense ratio is now 0.04% for the fund's Institutional Shares and 0.02% for Institutional Plus Shares.
The expense ratio for each share class of the Balanced Index Fund has stayed the same because BDC expenses were not a component in these expense ratios.
The new CRSP Indexes meet Vanguard's "best practice" standards for market benchmarks and will help enable the company to deliver significant value to index fund and ETF shareholders in the form of lower expense ratios over time. For more information about Vanguard's benchmark changes, go to Index Innovation at Vanguard.
Since the October announcement, the benchmark changes have been embraced by investors, with the 22 funds adopting new indexes attracting nearly 10% of Vanguard's record-setting net new cash flow for all of 2012.
Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world's largest investment management companies and a leading provider of company-sponsored retirement plan services. Vanguard manages nearly $2 trillion in U.S. mutual fund assets, including more than $240 billion in ETF assets (as of 12/31/12). The firm offers more than 170 funds to U.S. investors and more than 70 additional funds in non-U.S. markets. For more information, visit vanguard.com.
About The Center for Research in Security Prices (CRSP)
CRSP (Center for Research in Security Prices) is one of 11 research centers at the University of Chicago Booth School of Business. The research organization pioneered the development of U.S. stock market data in 1960 that are widely used in academic and investment research. The CRSP Indexes capture broad U.S. equity market coverage and include securities traded on the NYSE, AMEX, NASDAQ and ARCA markets. Nearly 4,000 constituents across mega, large, mid, small and micro capitalizations, representing 100% of the U.S. investable equity market (or 99.5% of cumulative full market capitalization of U.S. equity), comprise the market-cap indexes. CRSP's portfolio of historical databases for common stocks, mutual funds, Treasuries, REITs and research indexes is relied on by more than 435 leading academic institutions in 31 countries. It is also widely used for research in the commercial and governmental sectors. For more information, visit www.crsp.com.
All asset figures are as of December 31, 2012.
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