Vanguard has been offering ESG funds for more than 20 years to help investors with certain value preferences reach their goals. We’re excited to announce that our first ESG U.S. Corporate Bond ETF is coming in September to complement our ESG equity lineup of ETFs and mutual funds.
Sustainable funds attract record flows in Q1 2020
Despite the market volatility in March of this year, estimated net flows into open-end and exchange-traded sustainable funds in the U.S. totaled $10.5 billion for the first quarter alone, surpassing the record set in the fourth quarter of 2019.*
A closer look at ESG investing
ESG investing offers a way for you to invest in funds that exclude companies who do not meet certain criteria like commitment to low carbon emissions, community impact, or board diversity. Some ESG funds, like Vanguard Global ESG Select Stock Fund, follow an integrated approach and include companies making strides toward ESG practices.
As ESG-minded practices gain momentum, some investors believe they offer an opportunity to avoid companies whose practices could signal a risk. For example, are there issues related to a company’s management of toxic emissions or working conditions that could cause a portfolio to perform poorly?
Vanguard currently has 4 U.S. domiciled ESG stock funds with differing investment styles and objectives. We believe expanding our ESG offer with the addition of our first bond ETF will further enhance our low-cost approach and satisfy evolving investor preferences.
New corporate bond ETF will expand our ESG offer
Investors in our new fund will benefit from diversified access to our leading fixed income indexing capabilities, a low expense ratio, and a robust screening process. The fund will:
- Seek to track the Bloomberg Barclays MSCI US Corporate SRI Select Index, capturing a broad cross-section of the U.S. corporate bond market while excluding the bonds of companies whose activities don’t meet specific ESG criteria.
- Have an estimated expense ratio of 0.12%, which is significantly lower than the average expense ratio for ethically themed fixed income funds of 0.72% as of March 31, 2020, according to Lipper, a Thomson Reuters Company.
- Be advised by Vanguard Fixed Income Group, one of the world’s largest fixed income managers with $1.921 trillion in global assets under management as of June 30, 2020.
- Be managed by Joshua C. Barrickman, CFA, a principal and co-head of Fixed Income Group Indexing Americas in Vanguard Fixed Income Group. Josh has been with Vanguard for 22 years.
Look for more information in the coming months about this exciting new offer.
*Source: Morningstar, Inc., 2020.