According to the Sun Financial Diary Vanguard has just revealed plans that they have to release a total global stock index fund.
As most new investors like myself are learning, buying index funds of the entire markets are a great way to buy stocks without thinking too hard about it. You buy a share in the fund and you then own a piece of the markets the same size as they are found in the major indexes. The returns for these index funds are reliably good, and can be a great low cost way to “set it and forget it” when it comes to your investment. From the Vanguard press release:
Vanguard filed a registration statement on Wednesday, April 2, 2008, with the U.S. Securities and Exchange Commission (SEC) to offer a global equity index fund: Vanguard® Global Stock Index Fund. The fund will offer three share classes—Investor, Institutional, and ETFs—that are expected to be available in the second quarter of 2008. This will be Vanguard’s first passively managed global index fund.
The new fund will seek to track the performance of the FTSE All-World Index, a float-adjusted, market capitalization-weighted index designed to measure equity market performance of large- and mid-capitalization stocks worldwide. The fund will invest in a broadly diversified sampling of securities from the target benchmark, which comprises more than 2,800 large- and mid-cap stocks of companies in 48 foreign countries. Approximately 55% of the index is made up of stocks from outside the U.S.
The fund’s ETF shares are expected to be offered with an expense ratio of 0.25%. Investor Shares, which will require a $3,000 minimum initial investment, are expected to be offered with an expense ratio of 0.45%, and Institutional Shares, which will require $5 million, are expected to be offered with an expense ratio of 0.20%.
Sounds like this may be an attractive option for a lot of people who want to be more passive about their retirement income.
As I discussed in my “Is it ok for a Christian to invest in “Vice Stocks”? Part 1” series, index funds still may be a bit problematic for those who want to avoid owning stocks in morally problematic companies altogether. Something to keep in mind when deciding whether to invest in this new global index fund.