Earlier this month, Vanguard Group declared a 2-for-1 split of Vanguard Emerging Markets (VWO), Vanguard Total Stock Market ETF (VTI) and Vanguard Extended Market ETF (VXF) to bring down their prices. (The record date was June 13, and the shares began trading at their split-adjusted price June 18.) Because splits can cause confusion for some investors, I'd like to explain how they work and how your holdings will be affected when a split occurs.

Most ETFs, like most stocks, trade for prices below $100 to attract individual investors. When they breach that barrier, they usually split. Before the recent Vanguard split, for instance, VWO traded above that price.

Among stock investors, a split is applauded as a sign of success, and novice investors are routinely suckered into buying ahead of splits because they think something magic is about to happen. In fact, it's simply an accounting mechanism. If a $100 stock splits 2-for-1, investors are left with twice as many shares, each worth half as much.

Warren Buffett has never split the shares of Berkshire Hathaway, and the A shares (BRK.A) have traded recently around $130,000. But under shareholder pressure, he did allow the creation of Class B shares (BRK.B), worth 1/30th of a Class A share. Even so, their recent price of more than $4,000 limits their popularity.

Some 58 ETFs, or 7.9% of the total outstanding, trade for more than $100. Except for bookkeeping purposes, however, the share price of an exchange-traded fund, as for a mutual fund, is immaterial. It's simply the value of its holdings divided by the number of shares outstanding.

But even mutual funds strive to keep their net asset value per share below $100. Only 0.3% of mutual funds have higher per-share prices, according to Morningstar.

Just remember to record the change in your files for any ETFs you own that split their shares, or you'll suffer a phantom loss that's bound to be upsetting.