Fee Battle Moves to All-World Ex-U.S. ETFs

Includes: ACWI, CWI
by: Tom Lydon

For Vanguard, the ETF price wars are on.

The name of the game is to undercut the largest two competitors Vanguard has – BlackRock and State Street.

Joe Morris for Ignites reports that one new ETF, expected to launch in the first quarter, will be added as an asset class to Vanguard’s $26 billion Total International Stock Mutual Fund. The fund is also simultaneously switching benchmarks, from the MSCI EAFE + Emerging Markets Index to the MSCI All Country World ex-USA Investable Market Index.

Vanguard says the switch will give “better representation” of global equity markets. The new index covers 98% of the world’s non-U.S. markets, including more than 6,000 issues encompassing stocks of large-, mid- and small-capitalization companies in 44 countries, Vanguard notes.

This index change will put the Vanguard fund in direct competition with iShares MSCI ACWI ex-U.S. (NYSEArca: ACWX) and SPDR MSCI ACWI ex-U.S. (NYSEArca: CWI). However, Vanguard intends to charge less: 0.20%, compared with 0.35% for iShares’ $740 million ETF and 0.34% for State Street’s $390 million ETF.

Tisha Guerrero contributed to this article.

Disclosure: None