Vanguard today announced plans to replace the underlying MSCI benchmarks for 22 index funds, a move the Valley Forge, Pa.-based investment manager said will cut its index licensing costs. In turn, that should mean lower shareholder fees for a fund family already noted for its low-cost funds. 

In a press release, Vanguard said it negotiated licensing agreements for these benchmarks that it expects will enable it "to deliver significant value to our index fund and ETF shareholders and lower expense ratios over time."

"It's premature to discuss which products [will be affected] and how far expenses may fall going forward," Vanguard spokesman John Woerth said in a phone conversation.

The transition to the new benchmarks, which will be staggered over the coming months, will involve all share classes of the 22 funds, including 18 that have an accompanying ETF share class.

Six Vanguard international stock index funds representing $170 billion in assets will track benchmarks in the FTSE Global Equity Index Series. That includes its popular Vanguard Emerging Markets Stock Index Fund and the associated ETF shares (VWO), one of the world's largest emerging market ETFs.

And 16 U.S. stock and balanced index funds with combined assets of $367 billion will follow the new CRSP benchmarks developed by the University of Chicago's Center for Research in Security Prices. This includes Vanguard's largest index fund, the Vanguard Total Stock Market Index Fund and its ETF shares (VTI), which will transition from the MSCI U.S. Broad Market Index to the CRSP US Total Market Index.

London-based FTSE Group, a leading index provider and a familiar name to investors, has provided benchmarks for Vanguard index portfolios since 2003. Its expanded relationship with Vanguard makes it the third-largest equity ETF benchmark provider globally.

On the other hand, the CRSP indexes are an unknown quantity among retail investors. The Center for Research in Security Prices is a research center and financial database provider at the Booth School of Business at the University of Chicago. Although it has provided U.S. stock data since 1960, Vanguard will be the first fund company to link its products to the CRSP benchmarks.

According to a press release, CRSP's capitalization-weighted methodology employs a  "packeting" concept designed to cushion the movement of stocks between adjacent indexes and allow holdings to be shared between two indexes of the same family with the intent to maximize style purity while minimizing index turnover.

The switch among benchmark providers isn't an insignificant event, according to at least one industry watcher. "This could mean some risk for investors because what's inside the funds could change," said Todd Rosenbluth, an ETF analyst with S&P Capital IQ.