Vanguard has added to its current environmental, social, and governance (ESG) fund offering with the launch of the Vanguard ESG US Stock ETF (ESGV) and Vanguard ESG International Stock ETF (VSGX).
The new ETFs, which are among the lowest-cost ESG ETFs in the industry, can be purchased commission-free from Vanguard and are available on other leading trading platforms.
“Vanguard’s new ETFs can serve as core components of a portfolio for individuals, institutions, and advisors who wish to invest in broadly-diversified, low-cost ETFs screened for certain ESG criteria,” says Matthew Brancato, head of Vanguard’s Portfolio Review Group. “At the same time, investors should recognise that funds with ESG screens may perform differently than the broad market due to the exclusion of stocks of certain companies.”
With estimated expense ratios of 0.12 per cent for Vanguard ESG US Stock ETF and 0.15 per cent for Vanguard ESG International Stock ETF, these funds offer ESG-conscious investors low-cost access to a majority of US and international equity markets. Covering more than 80 per cent of the US equity market capitalisation and nearly 70 per cent of the international equity market capitalisation, the funds exclude companies involved in the production of alcohol, tobacco, gambling, adult entertainment, weapons, fossil fuels, and nuclear power. The construction methodology also excludes companies that do not meet certain diversity criteria, as well as the labour, human rights, anti-corruption, and environmental standards defined by the UN Global Compact Principles.
Vanguard ESG US Stock ETF seeks to track the FTSE US All Cap Choice Index, an ESG-screened, market-cap-weighted benchmark comprised of large-, mid-, and small-cap US stocks. Vanguard ESG International Stock ETF’s target benchmark is the FTSE Global All Cap ex US Choice Index, an ESG-screened, market-cap-weighted benchmark comprised of large-, mid-, and small-cap stocks in developed and emerging international markets (excluding the US).
Vanguard ESG US Stock ETF and Vanguard ESG International Stock ETF complement Vanguard’s existing ESG offering for US investors, Vanguard FTSE Social Index Fund. Along with Vanguard’s addition to its US product offering, the firm launched a suite of ESG funds for Australian investors in late August. Altogether, Vanguard’s global ESG product line-up provides options for socially conscious investors across North America, Europe, and Australia.
Vanguard’s Equity Index Group, which manages more than USD3.1 trillion in assets across the globe, serves as the investment advisor for both ETFs. William Coleman and Gerard O’Reilly, who currently manage Vanguard FTSE Social Index Fund, serve as portfolio managers for Vanguard ESG US Stock ETF. Christine Franquin and Scott Geiger are the portfolio managers for Vanguard ESG International Stock ETF. In addition to their broad investment management experience, the portfolio managers draw on the diverse perspectives and knowledge of the broader Equity Index Group to pursue accurate benchmark tracking, prudent risk management, and highly competitive investment performance.
