What is the Implied Temperature Rise (ITR) metric? Learn what the metric means, how it is calculated, and about the assumptions and limitations for this forward-looking climate-related metric.Ĭlimate change is one of the greatest challenges in human history and will have profound implications for investors.

Review the MSCI methodologies behind Sustainability Characteristics using the links below. For more information regarding the fund's investment strategy, please see the fund's prospectus. The metrics do not change the fund’s investment objective or constrain the fund’s investable universe, and there is no indication that a sustainable, impact or ESG investment strategy will be adopted by the fund. This fund does not seek to follow a sustainable, impact or ESG investment strategy.

Sustainability Characteristics should not be considered solely or in isolation, but instead are one type of information that investors may wish to consider when assessing a fund.

They are provided for transparency and for information purposes only. Sustainability Characteristics do not provide an indication of current or future performance nor do they represent the potential risk and reward profile of a fund. Alongside other metrics and information, these enable investors to evaluate funds on certain environmental, social and governance characteristics. If you are dollar-cost averaging by periodically purchasing shares of your S&P 500 index fund, the expense ratio may be lower, but the trading fees can make the fund more expensive than other options.Sustainability Characteristics provide investors with specific non-traditional metrics. Typical transaction fees range between $10 and $20. For example, if you already have an account at Vanguard, you may be charged a transaction fee to purchase a mutual fund like the Schwab S&P 500 Index, which is outside the Vanguard fund family. This means that the only difference between the index and the mutual fund's return is the fund's expenses.īefore deciding on an index fund to invest in, be sure to keep in mind other fees, such as trading costs. For example, if an S&P 500 index mutual fund has an expense ratio of 0.2%, a five-year annualized return of 10%, and a low tracking error, it might have an annualized return of roughly 9.8%. This will tell you how well the fund has tracked the benchmark index in the past. Analyze the Expense RatioĪfter looking at the historical performance, take into account the expense ratio. Here's an example: If a fund has an expense ratio of 0.2%, a five-year annualized return of 10%, and a benchmark return of 10.2%, the tracking error is precise. If the returns are below the benchmark by roughly the same amount as the fund's expense ratio, the tracking error is close. Research sites such as Morningstar, Lipper, and Kiplinger show how close the historical performance of the fund has been to the target benchmark. However, there are a few data points you can research to analyze performance tracking. One drawback of researching and analyzing this is that mutual fund families do not publicly display the tracking error of their index funds. The tracking error is a measure of an index fund's effectiveness in replicating or matching the performance of the benchmark index, which in this case is the S&P 500. Here are some qualities of index funds you'll want to look at before buying:

You shouldn't base your decision to invest in an S&P 500 index solely on price, but if you plan to invest long-term, the seemingly small differences in fees can add up to a sizeable amount of money. X While cheaper doesn't necessarily mean better, the best S&P 500 index funds tend to be the ones with the lowest expense ratios.

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