Today, Vanguard’s new Total World ETF (VT), tracking the FTSE All World index, became available to trade. It’s too early to get into the ETF, because there is virtually no volume, but this fund deserves watching.
The FTSE All World Index covers 47 countries and 2,908 companies, including both developed and emerging markets. FTSE says the index covers 98% of the investable world universe.
The ETF from Vanguard charges a 25 basis point fee. The sister mutual fund (VTWSX) has a higher expense ratio and charges a 2% fee for redemptions in the first two months (not a factor for the ETF).
In the short term, the mutual fund would be a better choice if you have a time horizon over 2 months, because of the liquidity factor.
The mutual fund will definitely execute at NAV on the day you place your buy order and will definitely execute at NAV on the day you place your sell order.
However, the ETF may not execute at all on the day of an order given the negligible initial volume. Here is a place where Vanguard has a strength that most other ETF sponsors don’t have — the ability to offer a mutual fund or an ETF for the same objective (actually the same investment pool).
Here is a listing of the top ten country holdings and the sector weightings as provided today in a FTSE email to investment advisors:
This fund will likely be useful to some investors as a core equity holding, to which they would add other country and sector funds to “tilt” their equity exposure this way or that, based on their situation and market views.
Note: FTSE is a joint venture of the Financial Times of London and the London Stock Exchange.
Richard Shaw
QVM Group LLC