Vanguard Lowers Fees On Its Emerging Market ETF(VWO) To 0.22%

Last month Vanguard’s Emerging Market ETF, VWO overtook BlackRock iShares’ ETF, EEM in total assets to become the largest Emerging Market ETF in the US. Both the funds have been swelling in size due to the popularity of this asset class among investors. BlackRock cut the fees of EEM from 0.72% to 0.69% last week. Vanguard responded by slashing the expense ratio on VWO by 5 basis points from 0.27% to 0.22%.

Both track the MSCI Emerging Markets Index.

Among BRIC countries, VWO has limited exposure to India and Russia with it’s largest concentration in Chinese and Brazilian stocks. VWO is currently trading at a discount of 0.67% due to the unrest in Egypt.

vanguard logo for VWO moneycone financial howto
The fund has returned more than 12% since inception.

VWO Top 10 Holdings As A Percentage Of Total Assets

Company
Country
Percentage
Petroleo Brasileiro SA ADR TypeBrazil1.8
Vale SA Class B ADRBrazil1.8
China Mobile Ltd.China1.5
Gazprom OAO ADRRussia1.5
America Movil SAB de CVMexico1.5
Samsung Electronics Co. Ltd. GDRTaiwan1.4
Industrial & Commercial Bank of ChinaChina1.1
China Construction Bank Corp.China1.1
CNOOC Ltd.Hong Kong1.1
Itau Unibanco Holding SA ADRBrazil1.0

VWO Top 10 Countries As A Percentage Of Total Assets

Country
Percentage
China17.3
Brazil16.1
Korea13.9
Taiwan11.3
India8.0
South Africa7.9
Russia6.5
Mexico4.6
Malaysia2.8
Indonesia2.3

You can also invest in VWO’s mutual fund counterpart VEIEX, and avoid trading fees. VEIEX requires a minimum investment of $3000, has an expense ratio or 0.40% with a purchase fee of 0.50% and a redemption fee of 0.25%.

Hmm! Tough choice!

10 thoughts on “Vanguard Lowers Fees On Its Emerging Market ETF(VWO) To 0.22%

  1. All right! Lower fee is great news. I have some VWO and it’s been taking a beating this year. Hopefully the unrest around the world will calm down soon although it sounds like the food price is causing a lot of these.

    I like VWO better than VEIEX. The purchase fee and redemption fee is more than what it cost to buy ETF right?

  2. I’ve been a fan of John Bogle and Vanguard for a long time. Mostly I own Vanguard mutual fund in our kid’s 529s. I’ve been thinking about buying an emerging markets investment for a while, and a good etf would fit the bill. Currently I only have the etf FXI (china).

    Perhaps I’ll switch FXI for VWO

    • VWO gives you more diversification than FXI and if you are particularly inclined towards China, VWO satisfies that too, China having the highest weight age in this fund.

      I augment with PIN (India fund) to compensate for the low India exposure.

  3. I’ve used Vanguard funds before because of the low fees. Never delved into this fund as I mostly stayed in US funds. Might have to broaden my horizon. With Egypt playing out peacefully, should we look harder at emerging markets?

    • Buck in a unemotional asset allocation plan Egypt shouldn’t figure at all! Trouble will always be brewing in some part of the world including the US. Think financial companies are out of the wood? Wait till Wikileaks reveals what it knows about BofA!

  4. Gotta love lower fees. It is down about 4.5% on the year, but that is what diversification is all about….. if one asset class is having a bad stretch hopefully other asset classes will compensate.

  5. Hi Moneycone — thanks for keeping us all informed. I have only recently come across your blog and will be a frequent visitor.
    Many thanks,
    Kevin

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