Vanguard Switches Benchmarks on Seven Index Funds

Like all shrewd index fund investors, Vanguard is also looking for lower costs on its investments. Thinking it has found a better bargain -- and more precise benchmark indices -- the firm is shifting nearly $20 billion of its assets.

The mutual fund giant announced Thursday changes to the indices on which it bases seven domestic equity funds. Vanguard said its board has opted for benchmarks created by Morgan Stanley Capital International, dropping six Standard & Poor's indices and the Russell 2000 index. The (VFINX Quote)Vanguard 500, the largest stock mutual fund around with $65.7 billion in assets, will continue to use the S&P 500 as its benchmark, however.

The switch comes after Vanguard's yearlong search to find indices that used better methodologies for choosing stocks than S&P's. ...