Home Latest Commentary chevron_right Adviser Fund Update Vanguard’s International Merger April 25, 2014 Vanguard Merges International Funds Earlier this month, Vanguard completed the scheduled merger of its Tax-Managed International and Developed Markets Index funds, part of a series of changes announced last fall to simplify the company’s fund lineup. While some of those moves weren’t as transparent as Vanguard may have made them out to be, in the case of these two international funds tracking the same benchmark, the reasoning was sound and investors in the funds are unlikely to notice much of a difference in what they own. The process was a bit more complicated than it seemed on the surface. Because Tax-Managed International was the bigger fund, with $23.5 billion in assets, Vanguard merged the smaller, $17.7 billion Developed Markets Index into it, but first had to add Investor shares for Tax-Managed International so that investors in the smaller fund’s various share classes could receive like-for-like shares when the funds combined. After all of this maneuvering, the fund left standing was renamed Developed Markets Index. Because of how Vanguard managed the merger, while the name is the same, the symbols on the Investor and Admiral Share Classes are not, which you can see in the table below. Same Name, New Address Old Symbol New Symbol Expense Ratio Minimum Developed Markets Index Investor Shares VDMIX VDVIX 0.20% $3,000 Admiral Shares VDMAX VTMGX 0.09% $10,000 ETFA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index. Shares VEA VEA 0.09% none Source: The Vanguard Group Up above, we mentioned that the reasoning for this move was sound, but you may have been left wondering, “What about the tax-managed aspect?” It’s a good question. Under the old Tax-Managed International’s mandate, the goal was to provide tax-efficient returns. While tax-efficiency was not and is not part of Developed Markets Index’s objective, the fund has proven to be nearly equal to the tax-managed fund in preserving after-tax returns. For example, over the three years through March, Tax-Managed International had a tax efficiency of 88.7%, while Developed Markets Index provided 87.8% efficiency, and the funds had identical annualized three-year after-tax returns of 6.4%. As long as Vanguard continues managing the fund the way it has, we think investors in the old Tax-Managed International won’t see much of a difference in the fund’s portfolio or tax efficiency characteristics over time. To read more about Vanguard’s nearly completed fund cleanup, please take a look at our October 25, 2013 issue of the Adviser Fund Update. The only item left on Vanguard’s announced agenda is the merger of Tax-Managed Growth & Income with 500 Index, which is scheduled to take place mid May this year. About Adviser Investments Adviser Investments operates as an independent, professional wealth management firm with expertise in Fidelity and Vanguard funds, actively managed mutual funds, ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index., fixed-income investing, tactical strategies and financial planning. Our investment professionals focus on helping individual investors, trustsA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process., foundations and institutions meet their investment goals. Our minimum account size is $350,000. For the fifth consecutive year, Adviser Investments was named to Barron’s list of the top 100 independent financial advisers nationwide and its list of the top advisory firms in Massachusetts in 2017. We have also been recognized on the Financial Times 300 Top Registered Investment Advisers list in 2014, 2015 and 2016. For more information, please visit www.adviserinvestments.com or call 800-492-6868. Disclaimer: This material is distributed for informational purposes only. The investment ideas and expressions of opinion may contain certain forward-looking statements and should not be viewed as recommendations, personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed. Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, riskThe probability that an investment will decline in value in the short term, along with the magnitude of that decline. Stocks are often considered riskier than bonds because they have a higher probability of losing money, and they tend to lose more than bonds when they do decline. factors, strategies, affiliations, services offered and fees charged. Past performance is not an indication of future returns. The tax information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. We do not provide legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. The Barron’s rankings consider factors such as assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. This award does not consider client experience and is not indicative of future performance. Editors at the Financial Times bestowed “elite” status on 300 firms in the U.S., as determined by assets under management, asset growth, longevity, compliance record, industry certifications and online accessibility. © 2018 Adviser Investments, LLC. All Rights Reserved.