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Quantifying the Cost of Vanguard’s Emerging-Markets Index Shift
If Korea underperforms with respect to other emerging market stocks the move might turn out advantageous to Vanguard fund. We will only know after the fact. Also, the stocks that vanguard is selling can provide downward momentum for those stocks. However, I expect there will be still significant overlap between indices so those overlapping stocks will change in percentage marginally so this might not be such a big deal.
If I am a manager of Actively managed fund, I would be looking to this as an opportunity to buy temporarily depressed stocks.
Reply to @fundalarm: EEM is beneficiary of assets which does not mean much for us fund investors. I really do not care if Blackrock is making more money or not for themselves.
Reply to @Investor: South Korea has been a developed country for quite awhile. So it is no surprise that the FTSE index did not include it in their developing market index. Going forward these countries continue to "mature" and so does their representation in the emerging as well as the frontier market indices.
Comments
If I am a manager of Actively managed fund, I would be looking to this as an opportunity to buy temporarily depressed stocks.