Vanguard Changing the Indicies Used

Vanguard announced they are changing the incidicies they use to construct some of their most widely held funds including the Vanguard Total Stock Market Index, The Vanguard International Stock Market Index, and the Vanguard Total Bond Market Index.  Instead of following the Morgan Stanley Capital Indicies (MSCI), domestic funds will follow the University of Chicago’s Center for Research in Security Prices (CRSP), and international funds Financial Times and Stock Exchange (FTSE) index.  The reason for the shift is to lower the ongoing fund fees.  The new indicies charge a lower licensing fee then than the current MSCI ones do.  Vanguard does not anticipate a major change in the composition of most of their broad based index funds.  They also do not anticipate signficiant capital gains distributions from the switchover.

The only possible hiccup involves South Korea.  Right now it is in the MSCI emerging market index.  FTSE has it in the developed market index.  If you own the Vanguard Total Stock Market Index or both the Vanguard Developed and

This is not the first time the Vanguard has shifted indicies, for example the Vanguard Total Stock Market Index moved from following the Wilshire 5000 to the MSCI index in 2005.