Vanguard Emerging Markets Stock Index

Scorecard
3 / 5 Stars
Lipper
3 3 1 5 3
Zacks Investment Research
4 (Sell)
Standard & Poor's
3 / 5 Stars
TheStreet.com
E (Sell)

#59 in Diversified Emerging Mkts

U.S. News evaluated 202 Diversified Emerging Mkts Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Performance

The fund has returned -8.03 percent over the past year, -3.14 percent over the past three years, 16.27 percent over the past five years, and 9.19 percent over the past decade.
 

Trailing Returns Updated 02.28.2014
Year to date -4.1%
1 Year -8.0%
3 Years (Annualized) -3.1%
5 Years (Annualized) 16.3%
10 Years (Annualized) 9.2%

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Summary

When a particular slice of the market posts outsize returns for the better part of a decade, investors might be satisfied just to match, rather than beat, those returns. With a 10-year annualized return of more than 16 percent as of the end of the first quarter, the Vanguard Emerging Markets Stock Index fund is a good choice for these investors. The fund offers diversified exposure to the emerging markets by closely tracking the MSCI Emerging Market Index and has beaten its peer average eight out of the last 10 years for a fraction of the cost.

As of March 05, 2014, the fund has assets totaling almost $56.33 billion invested in 912 different holdings. Its portfolio tracks the MSCI Emerging Markets Index, which is weighted toward the largest companies in the largest markets. Because of this, China, South Korea, India, Russia and Brazil make up 65 percent of the portfolio.

Because it tracks an emerging markets index, the fund has a history of high volatility. It lost 53 percent in 2008 and gained 76 percent in 2009. The fund has returned -8.03 percent over the past year and -3.14 percent over the past three years.

But over the past 10 years, the fund’s returns have never strayed further than three percentage points from the category average. And while many emerging market funds often have high expense ratios of well over 1 percent, this fund is cheap even for an index fund, clocking in at 0.4 percent. Vanguard launched the fund in 1994. The fund has returned 16.27 percent over the past five years and 9.19 percent over the past decade.

Investment Strategy

The fund tracks the MSCI Emerging Markets Index, an all-equity benchmark, and offers a low expense ratio. It is geared toward investors who want outright exposure to emerging markets, as every country is considered emerging, except the former emerging economies of South Korea, Taiwan, and Hong Kong, which account for 25 percent of the portfolio.

Role in Portfolio

Morningstar recommends this fund for a specialty role.

Management

Duane Kelly has managed the fund since its 1994 inception. In late 2008, he ceded much of the day-to-day management to Michael Perre, who has been with Vanguard since 1990. The fund is passively managed.
 

Fees

Vanguard Emerging Markets Stock Index has an expense ratio of 0.33 percent.

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Risk

Emerging markets can be more volatile than their developed market counterparts.

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