Any rumors about a non-SOE version of VWO??

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patriciamgr2
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Any rumors about a non-SOE version of VWO??

Post by patriciamgr2 »

I would prefer an attractively-priced emerging market index which excludes State Owned Enterprises. I know Wisdom Tree has an XSOE ETF, but I was wondering if there were any rumblings that Vanguard was considering an ex-SOE emerging market fund. On a slightly different topic, I noticed the iShares emerging market ETF now has an ex-China version--any chance Vanguard will follow? Thanks for any thoughts. Patricia MG-er
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David Jay
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Re: Any rumors about a non-SOE version of VWO??

Post by David Jay »

This doesn’t feel like the kind of ETF that Vanguard would create, it feels rather “niche”.
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Re: Any rumors about a non-SOE version of VWO??

Post by JackoC »

David Jay wrote: Wed Oct 27, 2021 8:02 am This doesn’t feel like the kind of ETF that Vanguard would create, it feels rather “niche”.
Yeah sounds like a Wisdom Tree kind of thing, not a Vanguard kind of thing. I could see a change to standard 'emerging market' indexes that excluded or limited China depending on the future course of various events (greater control by the Chinese govt over ostensibly private sector companies, the general world geopolitical situation, etc.) but I wouldn't expect it immediately or necessarily ever.

And seems to me the primary issue for investors is what to make of Xi's intentions and how they will play out for the huge Chinese economy. I don't see that much of an issue in nominal 'state owned enterprises' defined as >20% government ownership as per Wisdom Tree, in any country (the specific term evokes Chinese ones but there are plenty in various countries). We may have a belief that wholly private sector companies are superior to partly state owned or controlled companies, but there are more and less well run companies of all kinds and we assume the market can price them accordingly, otherwise we wouldn't buy broad indexes but rather limit our investment to 'good companies'. I see no particular reason to exclude companies based on a nominal hurdle of % govt ownership, especially since govt's all over the world have a lot of indirect influence on companies (some feel too much, others feel not enough, but that's a topic for some other forum). Avoiding investing in China is something I can see a reasonable argument for (though I don't agree myself, not if China is only cap weight, ~4% of one's equity). I don't see much point in XSOE.
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Re: Any rumors about a non-SOE version of VWO??

Post by nisiprius »

I am a fairly serious fan of Vanguard mutual funds and ETFs. I first invested at Vanguard circa 1998. I eventually consolidated all my accounts at Vanguard. All of my securities holdings are Vanguard mutual funds.

If I saw an attractive non-Vanguard ETF or mutual fund that had a nice, clean aim at something I wanted to do, low expense ratio, been out for a reasonable number of years, reasonable amount of assets in it...

...I would just buy it. There is no way I would wait around to see if Vanguard got around to offering something.

1) Vanguard traditionally has not tried to be all things to all investors. They don't just try to offer something in every currently popular category. They are slow to create funds and ETFs (and slow to sunset them).

2) I like Vanguard, but particularly with index funds they have at best only a small "edge" over competitors. It's unlikely that I would judge Vanguard's fund to be hugely better than WisdomTree's.

3) And if Vanguard ever got around to offering something similar to XSOE, well, I could always exchange them. If I were really concerned about this possibility I could always make the original purchase in one of my tax-advantaged retirement accounts.

4) And because of being all-but-forced onto the "new brokerage platform," anyone who has a Vanguard account can buy a WisdomTree ETF just as easily as a Vanguard ETF.

I'm not recommending or suggesting XSOE and beyond checking inception date (2014) and assets under management ($4 billion) I haven't looked at the fund. But I would say if you want XSOE, buy it--don't wait for Vanguard to match it.
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Re: Any rumors about a non-SOE version of VWO??

Post by patriciamgr2 »

Thanks for sharing your expertise. I really appreciate the thoughtful input! Happy Halloween all. Regards, Patricia
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