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Vanguard launches two new international ETFs

Vanguard | 20 November 2014


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Vanguard announced the expansion of its suite of low cost products with the launch of two new international shares exchange traded funds (ETFs) quoted for trading on the ASX today.

The Vanguard MSCI Index International Shares ETF (ASX: VGS) and the Vanguard MSCI Index International Shares (hedged) ETF (ASX:VGAD) offer investors exposure to around 1500 securities across 22 overseas developed sharemarkets, excluding Australia.

The unhedged VGS tracks the MSCI World ex-Australia (with net dividends reinvested) in Australian dollars Index, and the hedged VGAD tracks the MSCI World ex-Australia (with net dividends reinvested) hedged into Australian dollars Index. Both widely used, broadly diversified benchmarks.

The launch of VGS and VGAD brings the number of ETFs offered by Vanguard for Australian investors and advisers to 12. With expense ratios of 0.18% per annum (VGS) and 0.21% per annum for the currency hedged version (VGAD), these funds are among the lowest-cost, locally managed international equity product offerings in the market.

Robyn Laidlaw, Head of Product and Marketing at Vanguard,
said that with the addition of these ETFs, Vanguard offers a comprehensive range of low-cost* equities ETFs, providing advisers, retail and institutional investors with the core building blocks for a diverse portfolio – including developed, domestic, US, international and emerging markets.

"Australians are among the world's most enthusiastic overseas travellers, however, when it comes to investing, our home country bias often comes at the expense of the valuable diversification of international investments.

"These new ETFs offer a simple way to tap into the diversification that international sharemarkets offer, through broad exposure to the world's developed equity markets, while also giving investors the tools to manage their currency risk," said Ms. Laidlaw.

The benefits of the local fund structure these products adopt include the flexibility to elect dividend reinvestment, simplified withholding tax administration, and no requirement for investors to complete the US W8-BEN tax form.

"VGS and VGAD provide straightforward low cost* access to international markets, whether hedged or unhedged, while keeping control of your reporting and investment management onshore," said Ms. Laidlaw.


VGS and VGAD at a glance

Fund:

Vanguard MSCI Index International Shares ETF

Vanguard MSCI Index International Shares (Hedged) ETF

ASX Code:

VGS

VGAD

Benchmark:

MSCI World ex-Australia (with dividends reinvested) in Australian dollars Index

MSCI World ex-Australia (with net dividends reinvested), hedged into Australian dollars Index

Management cost:

0.18% p.a.*

0.21% p.a.*

Hedging:

No currency hedging

Hedged into Australian dollars

Distribution frequency:

Quarterly: March, June, September, December

Semi-annually: June and December

Number of securities

~1,500

~1,500

Number of countries:

22

22


*In addition to the low management costs, investors may also incur brokerage and a bid ask spread when acquiring ETFs on the ASX.