Vanguard Ethically Conscious funds
Vanguard Australia has launched a series of environmental, social and governance (ESG) funds. The Vanguard Ethically Conscious International Shares Index Fund and the Vanguard Ethically Conscious Global Aggregate Bond Index Fund.
The international funds will exclude fossil fuel reserves, alcohol, tobacco, gambling, weapons, nuclear power and adult entertainment. Both funds will be available as hedged or unhedged options and both will also be available as index funds and exchange traded funds.
The Vanguard Ethically Conscious International Shares Index Fund tracks the FTSE Developed ex Australia ex Non-Renewable Energy/Vice Products/Weapons Index, which is a new index from FTSE and is part of its new FTSE Global Choice Index Series. It is a market capitalization weighted index that removes companies involved in fossil fuels, nuclear power, adult entertainment, alcohol, gambling, tobacco, and weapons.
The Vanguard Ethically Conscious International Shares Index Fund and ETF (ASX:VESG) will provide exposure to over 1,600 securities listed in major developed countries, at a low management expense ratio of 0.20 per cent and 0.18 per cent respectively.
The Vanguard Ethically Conscious Global Aggregate Bond Index Fund will track the Bloomberg Barclays MSCI Global Aggregate ex SRI Exclusions Index hedged to Australian dollars. It will have a management expense ratio of 0.28 per cent and 0.26 per cent for the ETF.
“We understand that some investors want products that allow them to achieve their investment objectives while also investing in line with their values. We are pleased to be offering ESG equities and fixed income funds that meet this need while maintaining the hallmarks of Vanguard funds, low cost and broad diversification,” Evan Reedman, Vanguard Australia's head of product and marketing said.
Millennials and female investors seeking ESG products: Q&A with FTSE Russell's Arisa Kishigami & Vanguard's Rachel White
- What was the motivation behind launching the FTSE Global Choice Index Series and has there been a lot of demand for these kinds of indices from institutional investors?
The digital age has brought increased transparency and scrutiny to the way companies do business, giving institutional investors a clearer view into company practices and sources of revenue. This has led to increased demand for tools, including indices that help investors align their values with their portfolios by selecting companies based on their impact on society and the environment. Given the range of regional and client segment preferences, we expect to see more demand for additional versions to the FTSE Global Choice indices in the future.
- How does FTSE Russell address the differing views and definitions around sustainable investing?
There is a vast array of terminology and definitions when it comes to sustainable investing, and people’s values can be quite varied. At FTSE Russell we have a track record of expertise in sustainable investing, dating back to 2001 with the launch of the FTSE4Good indices. A lot has changed over that time but one thing that hasn’t changed is the search for consensus around terms, definitions, and standards.
Among institutional investors, particularly large asset owners, the exclusionary approach to sustainable investment has long been an important tool in the toolkit. More recently many of those asset owners have shifted to a more integrated approach to sustainable investing but there is still a need for exclusion-based methodologies.
In order to deliver values-aligned investment solutions effectively you have to start by translating a broad and relevant set of environmental, social and governance (ESG) issues into definable, measurable characteristics of a company. That’s why we launched the FTSE Global Choice Index Series - to provide a tool for investors that want to align their investment choices with their values.