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Vanguard - Benchmarks

Vanguard's index management expertise

Learn more about benchmark providers

FTSE

CRSP

S&P

MSCI

Russell

NASDAQ

Barclays


The management teams behind Vanguard ETFs® and traditional index mutual funds have a solid track record with more than three decades of expertise in indexing. Vanguard launched the first retail index mutual fund in 1976, bringing the benefits of indexing—formerly limited to a few corporate pension funds—to the general public. Assets in Vanguard's index funds and ETFs have grown to approximately $1.58 trillion through December 31, 2013.

ETF Assets   Index Assets


We choose appropriate benchmarks

Index funds and ETFs are only as good as the indexes they seek to track. We apply our expertise in selecting the funds' target indexes to help ensure that the funds accurately reflect their target markets, making them more effective tools in implementing your asset allocation strategies.

What Vanguard looks for in a benchmark provider

Decades of experience have led us to develop theories on what constitutes best practices in index construction. While approaches to benchmark contruction vary, many benchmark providers are adopting the index construction best practices that we have promoted for years, including:

  • Objectivity. The benchmark's construction is transparent and determined objectively.
  • Accurate reflection of the market. The benchmark is the most accurate representation of the target market or market segment, and includes only shares available on the open market.
  • Market-cap buffer zones. Market capitalization divisions overlap, with no hard cutoff points.
  • Multifactor style analysis. Growth and value stocks are categorized using multiple criteria.
  • Timely and efficient construction. The benchmark's rebalancing approach reflects market changes in an orderly fashion.

Benefits of smart benchmark construction

  • Lower portfolio turnover
  • Lower transaction costs
  • Potential for greater tax efficiency
  • Accurate reflection of a targeted market (important for efficient asset allocation and for limiting overlap among funds)
  • Comparability among index products, allowing investors to choose based on preference, cost, and accessibility.

Historically our funds have tracked their targets

How closely the performance of an index fund aligns with that of its benchmark depends on costs and execution. As a result of our low expenses and indexing expertise, our funds have a history of tightly tracking their indexes.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in Creation Unit aggregations. Instead, investors must buy or sell Vanguard ETF Shares in the secondary market with the assistance of a stockbroker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

All investments are subject to risk, including possible loss of principal.

 

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