TORONTO, Sept. 18, 2016 /CNW/ - Vanguard Investments Canada Inc., announced today that the TSX-listed Vanguard FTSE Emerging Markets All Cap Index ETF (TSX:VEE) has fully transitioned to FTSE Emerging Markets All Cap China A Inclusion Index, effective at the opening of trading on September 19, 2016.
Since November 2, 2015, the fund has tracked the FTSE Emerging Markets All Cap China A Transition Index, as it gradually transitioned from the FTSE Emerging Index to the FTSE Emerging Markets All Cap China A Inclusion Index.
The FTSE Emerging Markets All Cap China A Inclusion Index is a market capitalization-weighted index representing the performance of large-, mid-, and small capitalization stocks in emerging markets.1 The index comprises approximately 3,561 securities from 22 countries, including exposure to 1,800 new small capitalization stocks and 1,500 new China A-shares stocks.
The Vanguard FTSE Emerging Markets All Cap Index ETF (TSX:VEE) is the first broad-based, market capitalization-weighted emerging-markets ETF to offer Canadian investors exposure to China A-shares and all-capitalization stocks.2
The transition concludes the benchmark change first announced by Vanguard Investments Canada on June 2, 2015. The change received unitholder approval on September 2, 2015. The change follows a similar index change to U.S.-listed Vanguard FTSE Emerging Markets ETF (NYSE:VWO) into which VEE invests. VWO is the world's largest emerging markets ETF, and its underlying fund is the $59 billion Vanguard Emerging Markets Stock Index Fund.
Addition of all-capitalization exposure
The new benchmark's 11% exposure to small capitalization stocks brings the fund closer to full market capitalization-weightings and offers additional diversification. Improved market conditions have lowered the cost of investing in international small-capitalization stocks, making it an opportune time to provide investors with added exposure to all-capitalization stocks and broader diversification.
Inclusion of China A-shares
Additionally, the new benchmark features 5% exposure to China A-shares stocks. China A-shares are equity shares in mainland China companies that are traded on the Shanghai and Shenzhen stock exchanges and are only available to foreign investors through regulated programs. China A-shares provide investors additional diversification via access to mainland Chinese companies that offer these shares.
China is one of the world's key emerging economies and the second-largest stock market in the world by market capitalization. With the world's second-largest GDP, China accounts for 16% of world GDP and has shown a 6.3% GDP growth rate.3 Vanguard believes access to this key market has the potential to offer significant long-term benefits for investors.
Vanguard Investments Canada Inc. is a wholly owned indirect subsidiary of The Vanguard Group, Inc. and manages more than CAD $9 billion in assets. The Vanguard Group, Inc. is one of the world's largest investment management companies and a leading provider of company-sponsored retirement plan services. Vanguard manages more than USD$3.8 trillion in global assets, including over USD$500 billion in global ETF assets. Vanguard has offices in the United States, Canada, Europe, Australia and Asia. The firm offers more than 350 funds, including ETFs, to its more than 20 million investors worldwide.
Vanguard operates under a unique operating structure. Unlike firms that are publicly held or owned by a small group of individuals, The Vanguard Group, Inc. is owned by Vanguard's U.S.-domiciled funds and ETFs. Those funds, in turn, are owned by Vanguard clients. This unique mutual structure aligns Vanguard interests with those of its investors and drives the culture, philosophy, and policies throughout the Vanguard organization worldwide. As a result, Canadian investors benefit from Vanguard's stability and experience, low-cost investing, and client focus. For more information, please visit vanguardcanada.ca.
Commissions, management fees, and expenses all may be associated with investments in a Vanguard ETF®. Investment objectives, risks, fees, expenses, and other important information are contained in the prospectus; please read it before investing. ETFs are not guaranteed, their values change frequently, and past performance may not be repeated. Vanguard ETFs® are managed by Vanguard Investments Canada Inc., an indirect wholly-owned subsidiary of The Vanguard Group, Inc., and are available across Canada through registered dealers.
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1 FTSE Emerging Markets All Cap China A Inclusion Index comprises large-, mid- and small-cap securities of the FTSE Emerging All Cap Index and FTSE China A All Cap Index. The weight of the FTSE China A All Cap Index in the FTSE Emerging Markets All Cap China A Inclusion Index will be adjusted by the quota available to international investors.
2Sources: Bloomberg and Morningstar
3Sources: Quandl, 2015 and International Monetary Fund, 2016
SOURCE Vanguard Investments Canada Inc.