Vanguard has added a second fund to its ESG ETF range within a matter of months as it continues to play catch-up with passive rivals on the responsible investing front.
The Vanguard ESG Global Corporate Bond Ucits ETF will track the Bloomberg Barclays MSCI Global Corporate Float-Adjusted Liquid Bond Index, which has been screened to exclude companies involved in weapons, non-renewable energy, GMOs and vice products like adult entertainment, gambling, alcohol and tobacco. Issuers with “very severe ESG controversies” or “red flags” as defined by the UN Global Compact Principle have also been removed.
The fund is meant to serve as a “core building block for ESG-aware portfolios” by providing “broad diversification while incorporating robust screening based on ESG criteria,” according to a press release announcing the launch.
It takes the total of Vanguard’s ESG trackers to six and marks the first fixed income product in its responsible investment stable.
Vanguard has been ramping up efforts to boost its ESG ETF offering after years of trailing behind other passive giants, including its biggest rival Blackrock.
In the last 12 months it has rolled out five funds, including the recently launched Vanguard ESG Global All Cap Ucits ETF, to sit alongside its existing SRI European Stock fund launched over a decade ago.
Despite its recent fund launches the $7.5trn asset manger’s commitment to ESG has been described as “low” by Morningstar, and its voting record continues to be called into question.
A recent report from nonprofit company As You Sow revealed Vanguard, as well as Blackrock, T Rowe Price and State Street, voted in favour of management resolutions more often when they had business ties for financial services.
Vanguard head of ESG strategy, UK and Europe, Fong Yee Chan said: “Vanguard continues to seek ways to deliver long-term ESG strategies to give value to investors. For those investors wishing to mitigate ESG risk or avoid companies that don’t align with their values, we are pleased to offer access to an ESG global corporate bond strategy through the new Vanguard ESG Global Corporate Bond Ucits ETF.”
The ETF will be managed by Vanguard’s 57-strong fixed income group which manages over $1.7trn assets globally.
With an ongoing charges figure (OCF) of 0.15% it is the second cheapest ESG fund in the passive giant’s stable, behind the SRI European Stock fund which has an OCF of 0.14%.
