VWO

The Vanguard FTSE Emerging Markets ETF (VWO) is an exchange-traded fund designed to track the performance of equity markets in emerging economies. The ETF is managed by Vanguard and trades under the ticker VWO on the NYSE Arca.

Classified as an equity ETF focused on emerging markets, VWO seeks to reflect, before fees and expenses, the performance of stocks issued by companies based in emerging economies.

To achieve this objective, the fund adopts a passive management strategy, maintaining a portfolio that aims to replicate the composition and weighting of its reference index.

VWO’s benchmark is the FTSE Emerging Markets All Cap China A Inclusion Index, which includes large-, mid-, and small-cap stocks from emerging market economies. The index is weighted by float-adjusted market capitalization and undergoes periodic reviews, including additions, removals, and rebalancing, a methodology followed by the ETF.

Diversification and sector exposure

VWO provides broad exposure to companies across multiple emerging regions, covering a wide range of economic segments. Sector diversification includes areas such as:

• Information technology.

• Financials.

• Consumer discretionary.

• Consumer staples.

• Energy.

• Materials.

• Industrials.

• Health care.

• Communication services.

Structure and costs

VWO shares are traded on the secondary market, while share creation and redemption are conducted through authorized participants, a mechanism that helps keep the ETF’s market price close to its net asset value (NAV). 

The fund charges a management fee consistent with passively managed ETFs and does not apply a performance fee.

VWO distributes income periodically, primarily derived from dividends paid by the underlying portfolio holdings.

History and evolution of the ETF

The Vanguard FTSE Emerging Markets ETF was launched in 2005, during a period of increasing global interest in exposure to developing economies. Since its inception, VWO has become widely used as a vehicle for diversified access to emerging market equities, maintaining a consistent passive investment approach.

In recent years, VWO has reflected the typical volatility of emerging markets, influenced by global monetary tightening cycles, economic developments in China, and changes in global supply chains. Currency fluctuations and geopolitical factors also played a relevant role in the fund’s performance.