Fund giant Vanguard Group Inc. plans to introduce exchange-traded funds based on the popular S&P 500 stock-market index and others as part of a line of new ETFs.

Vanguard's fund will be the third in the U.S. to track the S&P--State Street Corp.'s (STT) State Street Global Advisors provides its SPDR S&P 500 ETF that tracks the price and yield performance of the index, and Blackrock Inc.'s (BLK) iShares also has an ETF that tracks the index.

The difference among those indexes can come down to expense ratios--a Vanguard spokesman said its ETF's proposed expense ratio is 0.06%. The ratio for State Street's fund is 0.0945%, while iShares' expense ratio is 0.09%, according to company websites.

Another differentiator among the ETFs is how closely they track the index. For example, if the S&P is up 20% on the year, an index-tracking ETF could be up 19.99% or 20.01%, the Vanguard spokesman said.

Standard & Poor's, a subsidiary of McGraw-Hill Cos. (MHP), licensed the S&P 500 to Vanguard so it could create an ETF based on the index, which many investors view as the best representation of how the stock market is faring. Financial terms of the deal weren't disclosed.

The deal also allows Vanguard to launch eight new equity funds and ETFs that target the growth and value segments of the S&P 500, MidCap 400 and SmallCap 600.

The agreement comes after S&P last month said it had licensed seven European ETF sponsors to create and list S&P 500 ETFs on exchanges in major cities. The company also recently licensed the National Stock Exchange of India to create and list Indian rupee-denominated futures contracts on the S&P 500.

"Our agreement with Vanguard, and just recently with the seven European ETF sponsors and the NSE, underscores Standard & Poor's commitment to providing global investors with greater access to the products they need to meet their trading objectives," Alex Matturri, executive managing director at S&P Indices, said Thursday.

Vanguard said it was expanding its index-fund family by introducing 19 new funds with ETF shares to "provide investors with additional low-cost stock and bond choices." The new ETFs will have expense rations that are "substantially below" those of competing products, Vanguard said.

-By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com
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