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Vanguard Fires MSCI; Should You Fire Vanguard?

If you prefer to stick with the MSCI classification methodology with your international equity exposure, then you will need to fire Vanguard, at least for some of your holdings.

In this regard, my iShares Introduces Core ETF Lineup article identifies some of the advantages of the Investable Market Indexes from MSCI. Be sure to factor in the potential tax consequences of your actions before making your final decision on firing Vanguard.

Vanguard's announcement of these index changes stressed the potential cost savings as a primary reason for the change. Personally, I don't think investors should make major decisions based on small differences in expense ratios. At expense ratio differences of less than 0.1%, other factors become more important.

Vanguard has been very successful in the past when competing on price, but it is now moving the battlefield to other, less quantifiable, factors. Time will tell whether or not that prior success moves as well.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Ron Rowland is the founder and president of Capital Cities Asset Management, a fee-based registered investment adviser in Austin, Texas. He is also the founder and publisher of Invest With An Edge and All Star Investor, where he has been providing market commentary and active investment advice since 1991. Opinions expressed in this article should not be considered personal recommendations to buy or sell any security.
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