Vanguard Pacific Stock IndexVPACX

Morningstar Rating

Fund Research and Analysis

by William Samuel Rocco

Vanguard Pacific Stock Index does its job well, but it's difficult to categorize and to use.

This fund is designed to replicate the MSCI Pacific Index, which is a market-cap-weighted index of the region's five developed markets and thus contains a hefty Japan stake, a sizable Australia position, small weights in Hong Kong and Singapore, and a tiny stake in New Zealand. Read more

Kudos

Bargain-basement expense ratio.

Replicates its benchmark's performance very well.

Has outpaced the typical Japan fund over the mid- and longer terms. Read more

Risks

Unusual country mix makes it inappropriate for those wanting a Japan-only fund or broader Pacific exposure.

Portfolio has significant overlap with the Asia portions of most foreign large-cap funds.

Has lagged the average diversified Pacific/Asia offering over the mid- and longer runs. Read more

Strategy

This fund is designed to replicate the MSCI Pacific Index, which is a market-cap-weighted index of the region's five developed markets and thus contains a 65% to 80% Japan stake, a roughly 20% Australia position, approximately 5% weights in Hong Kong and Singapore, and a tiny stake in New Zealand. Read more

Management

Vanguard's Michael Buek has been a manager of this fund since 1997. For years Gus Sauter, Vanguard's indexing chief, was also a key day-to-day manager on this fund and many other Vanguard index trackers, but Sauter has been reducing his involvement in the daily management of individual funds since becoming the firm's chief investment officer in 2003. Read more

Inside Scoop

This fund tracks the MSCI Pacific Index, which includes five markets: Japan, Australia, Hong Kong, Singapore, and New Zealand. It devotes about 70% of its assets to Japan, so it lands in the Japan category, but it stands out from its peers because of its non-Japan stake. Read more

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