Vanguard CIO calms investors over index fund benchmark switch

George Sauter Vanguard
Vanguard Group Chief Investment Officer George “Gus” Sauter

Vanguard Group Chief Investment Officer George “Gus” Sauter reassured investors in a webcast Tuesday that in the long term they will save hundreds of millions of dollars in fees because the fund giant switched 22 of its index funds to new lower-cost indexes.

Mr. Sauter did not say when shareholders of the funds will share in the cost reduction, Vanguard operates on an at-cost basis.

Mr. Sauter assured investors that the new indexes are high quality, “best in class” indexes.

All 22 of the funds had used benchmarks from index provider MSCI.

Vanguard on Oct. 2 announced that 16 of its index funds, primarily invested in U.S. stocks, will track new benchmarks from the University of Chicago's Center for Research in Security Prices while another six funds that are international stock oriented will track indexes from FTSE Group.