Vanguard REIT ETF changes its index

Feb 9th, 2018 | By | Category: Alternatives / Multi-Asset

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Vanguard has changed the underlying index for the Vanguard REIT ETF (VNQ US) from the MSCI US REIT Index to the MSCI US Investable Market Real Estate 25/50 Transition Index.

Changes to Vanguard REIT ETF

Changes to Vanguard REIT ETF

As its name suggests, the new index is only temporary as, from approximately the third quarter of 2018, VNQ will begin to track the MSCI US IMI Real Estate 25/50 Index. The purpose of tracking a transition index in the interim is to gradually increase the fund’s coverage outside of REITs to include other types of real estate related companies – for example, companies involved in services and development.

Both indices comprise large, mid and small cap US securities of the real estate sector as classified by the Global Industry Classification Standard (GICS). The indices apply certain investment limits to help ensure diversification. For example, they impose limits on regulated investment companies (RICs) under the current US Internal Revenue Code.

Reflecting the broader scope of the new underlying index (as well as the eventual permanent index), the fund will henceforth be named the Vanguard Real Estate ETF and will trade under the same ticker VNQ US.

As of 9 February 2017, VNQ has just under $30 billion in assets under management and has an expense ratio of 0.12%.

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