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Vanguard Introduces New Index Funds and ETFs

Plus, Janus takes first ETF step, and more.

Morningstar Analysts, 09/13/2010

Following its filing in June, Vanguard today introduced a series of eight new index funds and nine new ETFs based on various S&P domestic-equity indexes. Among the new securities is an ETF version of the Vanguard 500 Index VFINX fund, which will have a rock-bottom expense ratio of 0.06%. In addition, Vanguard will bring out eight other equity index funds and ETFs benchmarked against the growth and value segments of the S&P 500 Index and segments of the S&P MidCap 400 and SmallCap 600 indexes.

In the coming months, Vanguard plans to bring out 11 more index funds with ETF shares, including seven equity index funds with ETF shares tracking portions of the large-cap Russell 1000 index series and the small-cap Russell 2000 index series, as well as one tracking the Russell 3000 Index. On the fixed-income side, Vanguard will introduce three new municipal-bond index offerings, tracking benchmarks in the S&P National AMT-Free Municipal Bond Index series.

A new global real estate fund, which will also offer ETF shares, is also in the works.

Janus Files to Launch ETFs and Plans Fund Merger
Janus Capital Group JNS recently took its first step toward launching ETFs by filing an exemptive order with the SEC last Friday. A spokesman indicated that it could take 12 to 14 months for Janus to receive the exemption allowing it to register ETFs. At this point, it doesn't appear that Janus has a firm plan or timeline in place for bringing ETFs to the marketplace; the SEC filing details an asset-allocation offering but it isn't clear that this would be Janus' first ETF out of the gate.

In other news, in early 2011, Janus will combine two of its large-growth funds: Janus Research Core JAEIX will be merged into Janus Growth & Income JAGIX. The two funds' portfolios have about 45% overlap. The management fee of the Growth & Income fund will be reduced to 60 basis points from 62 to match Research Core's management fee.PAGEBREAK

Oak Value Becomes RS Capital Appreciation
This week, Oak Value OAKVX officially joined the RS fund family and changed its name to RS Capital Appreciation. The fund's investment team won't change and they'll stay in North Carolina. (RS Investments is based in San Francisco.) The fund's strategy will also remain the same. Shareholders will receive one immediate benefit. The fund's A shares will charge a 1.25% expense ratio, still not cheap but considerably lower than its prior 1.51% price tag.

In June, RS Investments agreed to buy the fund's advisor, Oak Value Capital Management, Inc.

More Details on New Osterweis Balanced Fund
Morningstar reported in July that Osterweis Capital Management filed with the SEC to register a new fund called Osterweis Strategic Investment, whose ticker will be OSTVX. This week, the firm announced the fund's launch. It will start out with 50/50 stock/bond allocation and like the Osterweis OSTFX fund, its equity allocation favors global blue chips with attractive yields that can grow and also special situations. Similar to the firm's Strategic Income OSTIX, the fixed-income portion will favor short-term, high-yield corporate bonds and some convertible bonds and should have a yield of 5.5%. The new fund has the ability to move its allocation from 75% stocks/25% bonds to 25% stocks/75% bonds based on the managers' assessment of macroeconomic and market conditions, and individual security opportunities. It will have a 1.5% expense ratio and will be managed by the teams running the firm's existing two open-end funds.

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