VALLEY FORGE, PA — Vanguard this week announced it is broadening the accessibility and utility of three ETFs in its Russell Index series by employing forward share splits. Vanguard Russell 1000 Value ETF (VONV) and Vanguard Russell 2000 ETF (VTWO) have declared a two-for-one share split, and Vanguard Russell 1000 Growth ETF (VONG) has declared a four-for-one share split.
“Vanguard carefully monitors fund health to ensure that funds are performing as expected, being appropriately utilized, and aligning with investor-desired outcomes,” said Kaitlyn Caughlin, head of Vanguard Portfolio Review Department. “Vanguard is employing ETF share splits to keep share prices within efficient and accessible trading ranges, which benefits investors with ETF-centric portfolios by reducing uninvested cash in client accounts.”
Vanguard stated it periodically and diligently assesses its ETF lineup to determine when and where share splits would most benefit investor outcomes. A number of factors are considered, including ETF market price, bid-ask spread, and trading volume. These three ETFs meet Vanguard’s rigorous standards for executing a share split at this time.
Financial advisors are increasingly utilizing Vanguard ETFs through Vanguard-managed or third-party models to construct low-cost, broadly diversified portfolios on behalf of their clients. Lower share prices enhance the functionality and utility of these ETFs within those models, particularly when rebalancing client portfolios.
The share splits for Vanguard Russell 1000 Value ETF and Vanguard Russell 2000 ETF will result in each shareholder receiving one additional ETF share for every share held. Similarly, shareholders of Vanguard Russell 1000 Growth ETF will receive three additional shares for every one share held.
Vanguard states all investors who own shares as of the close of trading on Monday, April 19, 2021, will have their shares included in the share split. The shares are expected to start trading at the new split-adjusted price beginning April 20, 2021. Importantly, ETF share splits have no impact on the market value of an investor’s holdings of the ETF and do not trigger any tax consequences.
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