Vanguard Group Inc., the largest U.S. mutual-fund provider, will drop MSCI Inc. as the benchmark provider for 22 index funds holding about $537 billion in assets, to cut costs for fund shareholders over time.

Vanguard will adopt benchmarks from FTSE Group for six international stock index funds, and benchmarks developed by the University of Chicago's Center for Research in Security Prices for 16 U.S. equity and balanced funds, the Valley Forge, Pennsylvania-based firm said today in a statement.

"With our clients' best interests in mind, we negotiated licensing agreements for these benchmarks that we expect will enable us to deliver significant value to our index fund and ETF shareholders and lower expense ratios over time," Vanguard Chief Investment Officer Gus Sauter said in today's statement.

The change will affect both index mutual funds and exchange-traded funds at Vanguard, whose ETFs are structured as share classes of its mutual funds. Vanguard Total Stock Market Index Fund, the company's largest index fund with $197 billion in assets, and its ETF share class are among those that will switch from the MSCI benchmarks.

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