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Overview

Benchmarks

Overview
About our benchmarks
CRSP
Center for Research in Security Prices
FTSE
The FTSE Global Equity Index Series
SPDJI
S&P Dow Jones Indices
Bloomberg
Fixed Income Indexes

What Vanguard looks for in benchmarks

Index products and the benchmarks they seek to track have proliferated. But index providers’ methodologies vary, so two benchmarks tracking the same market segment may deliver very different results. We believe that selecting an appropriate benchmark is crucial to providing a best-in-class ETF. 

 

Benchmark construction best practices

Many index providers use benchmark construction best practices that Vanguard has promoted for years. We believe stock and bond benchmarks should:

  • Be based on objective rules, not subjective judgment
  • Include only shares and bonds that are available on the open market
  • Reflect market size and style changes through orderly rebalancing

Additionally, stock benchmarks should use multiple criteria to categorize growth versus value stocks and buffer zones so that market-capitalization divisions can overlap, with no hard cut-off points, to limit unnecessary turnover.

 

Benefits of well-designed benchmarks

Using best practices to construct benchmarks can deliver benefits to investors, including:

  • Low portfolio turnover, which leads to lower transaction costs and potentially greater tax-efficiency.
  • Better reflection of targeted markets, which can make index funds efficient asset allocation tools.
  • Comparability among index products, allowing investors to choose benchmarks based on preference, cost and accessibility.

Commissions, management fees, and expenses all may be associated with investment funds. Investment objectives, risks, fees, expenses, and other important information are contained in the prospectus; please read it before investing. Investment funds are not guaranteed, their values change frequently, and past performance may not be repeated. Vanguard funds are managed by Vanguard Investments Canada Inc. and are available across Canada through registered dealers.

This material is for informational purposes only. This material is not intended to be relied upon as research, investment, or tax advice and is not an implied or express recommendation, offer or solicitation to buy or sell any security or to adopt any particular investment or portfolio strategy. Any views and opinions expressed do not take into account the particular investment objectives, needs, restrictions and circumstances of a specific investor and, thus, should not be used as the basis of any specific investment recommendation. Investors should consult a financial and/or tax advisor for financial and/or tax information applicable to their specific situation.

All investment funds, including those that seek to track an index are subject to risk, including the possible loss of principal. Diversification does not ensure a profit or protect against a loss in a declining market. While the Vanguard ETFs are designed to be as diversified as the original indices they seek to track and can provide greater diversification than an individual investor may achieve independently, any given ETF may not be a diversified investment.

All monetary figures are expressed in Canadian dollars unless otherwise noted.