The fund is geared to “risk-tolerant investors with a targeted approach to exposure in the region,” according to Vanguard. While it may offer investors diversification benefits and alpha potential, it’s the single-country focus that may expose them to “more acute investment, geopolitical, and regulatory risks,” according to Vanguard.
Indeed, the Chinese stock market has been volatile for much of this year, buffeted by changing federal regulations and problems and a problematic property market. Year to date, the MSCI China All Shares index is down about 12%.
The Vanguard China Select Stock Fund will have an estimated expense ratio of 0.83% for Investor Shares, which require a $3,000 minimum investment, and 0.73% for Admiral Shares, which have a $50,000 minimum. The average expense ratio of competing funds is 1.14%, according to Vanguard, which cites fee data from Lipper, the fund data company.
The fund is part of a growing number of active mutual funds at Vanguard, which account for a little more than one-fifth ($1.8 trillion) of the firm’s $8.4 trillion in assets under management.