Sail Boat

Vanguard Plans New VIPERS and Sector Funds

Sail Boat

The Vanguard Group announced nine VIPER ETFs as well as ten new sector funds and a large-capitalization fund. It vows to equal Barclays in breadth and depth of ETF offerings while still dominating traditional index mutual funds.

"The introduction of these new funds and share classes fulfills our desire to offer a full suite of index offerings tracking the best-available benchmarks," said Gus Sauter, Vanguard's Chief Investment Officer, who noted that Vanguard would be the first firm to offer funds with both traditional and exchange-traded shares on a broad range of benchmarks. All are expected to launch this Fall with details announced then.

The new VIPER Shares, (for Vanguard Index Participation Equity Receipts), all are based on existing funds and will bring Vanguard's ETF count to 22. New offerings include:

 

  • Value Index Fund
  • Growth Index Fund
  • Mid-Cap Index Fund
  • Small-Cap Index Fund
  • Small-Cap Value Index Fund
  • Small-Cap Growth Index Fund
  • European Stock Index Fund
  • Pacific Stock Index Fund
  • Emerging Markets Stock Index Fund

 

Ten Sector Funds

Vanguard will also launch ten funds that will track sectors of the MSCI US Investable Market 2500 Index, a broad measure of the US stock market. These include:

 

  • Energy Index Fund
  • Materials Index Fund
  • Industrials Index Fund
  • Consumer Discretionary Index Fund
  • Consumer Staples Index Fund
  • Health Care Index Fund
  • Financials Index Fund
  • Information Technology Index Fund
  • Telecommunication Services Index Fund
  • Utilities Index Fund

 

Always the advocate of conservatism, Vanguard downplayed these funds somewhat. "We believe most investors are best served by investing in broadly diversified index funds as the core of a prudent investment program. Sector fund holdings, if any, should represent a very modest portion of an individual's long-term, balanced portfolio," said Sauter. "However, some institutional investors and financial intermediaries find sector funds to be useful in more sophisticated investment strategies, and with our unique multi-class share structure, we're providing them with the flexibility to choose the share class best suited to their needs."

All will be available in VIPER ETF as well as in Admiral class form, which are lower-cost accounts with a minimum of $250,000.

New Large-Cap Index Fund

Finally, the firm announced a new Large-Cap Index Fund, which will track the MSCI US Prime Market 750 index, which currently represents the largest 88% of the US market's capitalization. It will be available in VIPER and Admiral class form.