Vanguard says new global fund first of its kind

The Vanguard Group Inc. is hoping to take advantage of an expected increased appetite for global diversification by offering what it says is the first of its kind: a fund that offers exposure to small-cap stocks in both emerging and developed markets outside the United States. The fund — the Vanguard FTSE All-World ex-US Small Cap Index Fund (VFSVX) — will track the FTSE Global Small Cap ex U.S. Index, which comprises approximately 3,300 companies in 47 countries. An initial subscription process for the fund begins today and is expected to run through April 2, after which the fund’s investment strategy will be implemented. According to research from Malvern, Pa.-based Vanguard, the benefits of international stocks as a diversifier should become most apparent when the stock market volatility abates and the global financial crisis passes. At that point, differences in the economic and financial-market performance of the United States and other countries should emerge, Vanguard said in a statement. The fund has an estimated expense ratio of 0.6% for individual investors and 0.35% for institutional shares.