Vanguard, the world’s biggest mutual fund company, began the well-publicized index change of its huge $60 billion emerging markets ETF with a name change that will reflect the fund’s new FTSE benchmark.

Effective today, the fund will have the name Vanguard FTSE Emerging Markets Index ETF (NYSEArca: VWO), abandoning the name Vanguard MSCI Emerging Markets Index ETF it has carried since its March 2004 launch. The fund will keep its ticker “VWO,” Vanguard said today in a press release.

Crucially, the name change doesn’t mean the index transition is finished. The company has said, and today reaffirmed, that VWO fund will follow a transitional index to better manage the ETF’s changing holdings, notably its weighting to South Korea.

Vanguard initially announced the transitioning of VWO and 21 other funds away from MSCI indexes on Oct. 2, 2012, framing the initiative as a way to lower its clients’ investment costs over the longer term. It reaffirmed that motivation in today's press release. A company spokeswoman also said Vanguard had no news on the other index transitions at this time, but that that would be forthcoming in due course.

So, for now, it’s all about VWO, and the movement to the transitional index that is being used to manage the elimination of the fund’s allocation to South Korea.

“In order to provide transparency to unitholders during the transition, the Emerging Markets Index ETF will follow a transition index, the FTSE Emerging Transition Index, for approximately six months,” Vanguard said.

“This extended transition period will reduce the costs associated with trading large amounts of securities in a short period. During the transition period, FTSE will provide a range of freely available index data with respect to the transition index on http://www.ftse.com/vanguard, including indicative constituents and weights.”

A total of six internationally focused funds—including VWO—will adopt FTSE indexes, while 16 other domestically focused portfolios will drop MSCI indexes and adopt benchmarks produced by CRSP, an indexing shop attached to the University of Chicago.

The Korea Question

At the center of the VWO transition is the question of allocation to South Korea—how that will be transitioned and how much of the Asian country investors want in their portfolios.

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