Industry Updates

Vanguard release two ESG ETFs

George Geddes

a group of trees in a field

Vanguard issued two new environment, social and governance (ESG) ETFs, yesterday the investment manager announced.

Vanguard ESG US Stock ETF (ESGV) will be tracking the FTSE US All Cap Choice Index which is comprised of small, mid and large-cap, ESG screened stocks based in the US. Additionally, Vanguard ESG International Stock ETF (VSGX) will be tracking the FTSE Global All Cap ex US Choice Index, comprised of small, mid and large-cap, ESG screened stocks in developing and emerging markets, outside of the US.

ESGV and VSGX, have an expense ratio of 0.12 per cent and 0.15 per cent, respectively. This is roughly 85 per cent lower than the average expense ratio of similar holdings which is why Vanguard is priding themselves, labelling these ETFs as "low-cost".

Vanguard are excluding all companies that are involved in the production of adult entertainment, alcohol, fossil fuels, gambling, nuclear power, tobacco and weapons, therefore, the two ETFs will perform differently to that of the broad market. In addition to the selection criteria, companies that do not comply with the standards set by the UN global compact principles, will also be excluded. Said principles includes human rights, forced labour, anti-corruption and diversity.

Matthew Brancato, head of Vanguard's Portfolio Review Group said: "Vanguard's new ETFs can serve as core components of a portfolio for individuals, institutions, and advisers who wish to invest in broadly-diversified, low-cost ETFs screened for certain ESG criteria".

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