The recent launch of Vanguard’s Total World Stock Index ETF (VT) brings choice and low-cost diversification to investors.
VT joins the iShares MSCI ACWI Index Fund (ACWI) in the category of offering investors an opportunity to gain exposure to stocks worldwide with a single investment. Because the funds are market-cap weighted and rebalanced automatically, they are a good choice for new investors who need to minimize transaction costs while building a diversified portfolio.
Both funds are low cost – VT at 0.25% and ACWI at 0.35% – which once again highlights the fact that mutual fund investors are at a disadvantage to ETF investors. In the Vanguard example, mutual fund investors pay an expense ratio of 0.45%, have a $3,000 minimum, pay a 0.25% purchase fee and are subject to a 2% short-term redemption fee for access to the same fund.
For more, see Investing in the Total Stock Market with ETFs in the ETF Themes guide.