Vanguard Group submitted a filing to the SEC on Monday for three "mega-cap" index funds. The funds will track the MSCI U.S. Large-Cap 300 Index, which covers the 300 largest stocks in the investable U.S. market; the MSCI U.S. Large-Cap Growth Index; and the MSCI U.S. Large-Cap Value Index.
The fund provider already has the Vanguard Large-Cap Index Fund that tracks the MSCI U.S. Prime Market Index, which covers the largest 750 stocks in the United States—or what MSCI defines as the large- and mid-cap segments. Growth and value funds based on subsets of the same index are also available.
Vanguard also offers mid-cap and small-cap funds based on the MSCI U.S. Mid-Cap 450 Index and MSCI U.S. Small-Cap 1750 Index and their growth and value subindexes. The MSCI U.S. Mid-Cap 450 covers the segment of the market just below the MSCI U.S. Large-Cap 300, while the MSCI U.S. Small-Cap 1750 covers the next 1,750 stocks. With the addition of the mega-cap funds, investors will have an entire suite of non-overlapping large-, mid- and small-cap funds to use for asset allocation purposes.
Investors must be wondering what took Vanguard so long. Except for the mid-cap growth and value index funds, which were introduced last year, the mid-cap, small-cap, small-cap growth and small-cap value index funds have existed in their current forms since May 2003. That was when Vanguard first adopted MSCI indexes for many of its index funds.
The Vanguard Mega Cap 300 Index Fund, Vanguard Mega Cap 300 Growth Index Fund and Vanguard Mega Cap 300 Value Index Fund will be available in ETF, institutional and investor shares. The investor shares will have the highest expense ratio at 0.20%, followed by the ETF shares at 0.13%. The institutional shares, not surprisingly, have the lowest expense ratio at 0.08%.
Written by Heather Bell