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Vanguard launches ESG US Corporate Bond ETF


Vanguard has launched its first fixed income environmental, social, and governance (ESG) ETF for US investors – the Vanguard ESG US Corporate Bond ETF (VCEB). 

The fund provides investors access to the US corporate bond market and expands Vanguard’s current index-and-actively-managed ESG offerings. Vanguard ESG US Corporate Bond ETF seeks to track the performance of Bloomberg Barclays MSCI US Corporate SRI Select Index and is listed on the Chicago Board Options Exchange (Cboe) with a low expense ratio of 0.12 per cent.

“Investors are increasingly seeking opportunities to better align their investment objectives with their personal values,” says Kaitlyn Caughlin, head of Vanguard’s Portfolio Review Department. “Vanguard’s new ESG US Corporate Bond ETF better enables them to do exactly that. The ETF will provide our clients an efficient means of accessing the credit markets while employing a meticulous exclusionary screening process developed by MSCI and implemented by Bloomberg.”

Vanguard has offered ESG funds to US investors for more than two decades, beginning with Vanguard FTSE Social Index Fund (VFTAX) in 2000. In recent years, Vanguard has broadened its equity ESG lineup with the addition of two ETFs, Vanguard ESG US Stock ETF (ESGV) and Vanguard ESG International Stock ETF (VSGX), and an actively-managed offering, Vanguard Global ESG Select Stock Fund (VESGX). Vanguard ESG US Corporate Bond ETF marks Vanguard’s initial entrance into the ESG fixed income market, an area that is growing in investor demand. US investor assets in ESG fixed income mutual funds and ETFs doubled in 2019 to USD850 million, and today, stands at USD1.8 billion. The new ETF will further complement Vanguard’s ESG suite, offering asset class diversification through US corporate bond market exposure.

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