(Reuters) - Vanguard Group, the largest U.S. mutual fund manager, said it was switching 22 of its biggest index funds away from benchmarks provided by MSCI Inc (MSCI.N) in order to cut costs.
Shares of MSCI plunged 16 percent on the news that one of its biggest index licensing customers had defected. The shares hit $30.15 in early trading on the New York Stock Exchange on Tuesday.
Vanguard said it would shift six international stock funds with $170 billion of assets to track indexes from the FTSE Group. And 16 U.S. stock and balanced funds with $367 billion of assets will switch to indexes developed by the University of Chicago’s Center for Research in Security Prices. The change affects both mutual funds and exchange-traded funds, Vanguard, based in Valley Forge, Pennsylvania, said in a statement.
“We negotiated licensing agreements for these benchmarks that we expect will enable us to deliver significant value to our index fund and ETF shareholders and lower expense ratios over time,” Gus Sauter, chief investment officer at Vanguard, said in a statement.
Reporting by Aaron Pressman; editing by John Wallace