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VALLEY FORGE, Pa. - Vanguard announced Monday it will seek shareholder approval to change the diversification status of its Health Care Index Fund and Financials Index Fund from diversified to non-diversified. Investors can track these funds’ performance and analyze their holdings using InvestingPro’s comprehensive ETF analysis tools.
The proposed changes would affect both the ETF share classes (VHT and VFH) and mutual fund share classes (VHCIX and VFAIX) of these funds, requiring a shareholder vote.
According to the company, the current diversification limits restrict the funds’ ability to directly invest in securities proportionally to their weights in their respective benchmarks, which have become increasingly concentrated in a small number of stocks.
Vanguard’s Board of Trustees believes these changes would benefit shareholders by allowing portfolio managers to better track each fund’s benchmark index, potentially improving investment performance.
Shareholders of record as of August 26, 2025, will be eligible to vote ahead of and during a virtual shareholder meeting scheduled for November 4, 2025. Voting options include online, phone, mail, or during the virtual meeting.
The announcement comes as benchmark indexes in both the healthcare and financial sectors have seen growing concentration in top holdings, creating challenges for index funds operating under diversification constraints.
This information is based on a press release statement from Vanguard.
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