might be late to the Japanese party, but at least it's leading with its strength.
The $560 billion titan plans to start selling funds in Japan this quarter, according to a company statement Wednesday. The firm's first two offerings will be its
500 Index and
Small Cap Index, which track the S&P 500 and Russell 2000 indexes, respectively. Vanguard is probably best known for the $102.8 billion S&P 500 index fund, the largest in the nation. The funds will be offered to Japanese investors through
, an online brokerage.
Many of Vanguard's competitors, including
, already have footholds in the Japanese market, mainly pitching their funds through banks and brokers. Major brokerages like
have expanded their Japanese retail operations in recent years as well.
Still, Vanguard hopes its low-cost funds and online offerings will catch investors' attention. Monex will sell the index funds with no sales charge or commission. The funds' annual expense ratios are expected to range between 0.88% and 0.95%. That's much higher than the funds' expense ratios for U.S. investors, both below 0.25%, but lower than the 1.5% fees Japanese investors typically pay.
Mexico Fund Aims to Tighten Focus
Eager to give the struggling closed-end
a boost, the fund's board of directors will ask shareholders to approve investment policy changes in the fall.
In September the fund's board, including manager Jose Luis Gomez-Pimienta, will ask shareholders to let the fund take a more focused approach. If the shareholders approve, the diversified fund will be reclassified as a nondiversified fund, allowing managers to bet more heavily on individual stocks and industry sectors. Currently the fund primarily spreads its $992.9 million among a broad mix of stocks listed on the Mexican Stock Exchange.
Shareholders might be receptive to the move since the fund, which started in 1981, hasn't been drawing much investor interest, which can be a thorn in a closed-end fund's side. Open-end funds are bought and sold for the value of their underlying securities. Closed-end funds, however, trade like a stock on an exchange with a finite number of shares. Due to flagging investor interest, most trade at a discount to their net asset value, which can put a serious drag on returns. At the end of June the Mexico Fund traded at a 30% discount.
Through the first six months of the year the fund lost 10.4% on a net asset value basis, but due to its discount, investors' market return was a negative 14.4%, according to
Through June 30, the fund's 10-year annualized return at net asset value is 10.5%, according to Morningstar. But due to its discount, the fund's annualized market return over the same period is just 5.8%, which trails its average peer.