VALLEY FORGE, Pennsylvania., September 24, 2020 / PRNewswire / – Vanguard today launched its first environmental, social and governance (ESG) fixed income bond ETF for US investors, the Vanguard ESG US Corporate Bond ETF (VCEB). The ESG ETF provides investors with access to the US corporate bond market and expands Vanguard’s current ESG offerings, actively managed by the index and actively managed. Vanguard ESG US Corporate Bond ETF seeks to replicate the performance of the 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%.1
“Investors are increasingly looking for opportunities to better align their investment goals with their personal values,” said Kaitlyn caughlin, Head of Vanguard’s Portfolio Review Department. “Vanguard’s new US Corporate Bond ESG ETF enables them to do just that better. The ETF will provide our clients with an efficient means of accessing the credit markets while using a meticulous exclusion screening process developed by MSCI and implemented. implemented by Bloomberg. ”
Vanguard has offered ESG funds to US investors for over two decades, starting with Vanguard FTSE Social Index Fund (VFTAX) in 2000. In recent years, Vanguard has broadened its range of ESG stocks 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 entry into the ESG fixed income market, an area where investor demand is growing. US investor assets in ESG fixed income mutual funds and ETFs doubled in 2019 for $ 850 million, and today stands at $ 1.8 billion.2 The new ETF will further complement Vanguard’s ESG suite, offering diversification across asset classes through exposure to the US corporate bond market.
Investment strategy filtered by exclusion
Vanguard ESG US Corporate Bond ETF will seek to track the performance of the Bloomberg Barclays MSCI US Corporate SRI Select Index. The index includes taxable, investment grade, fixed rate corporate bonds denominated in US dollars with a maturity greater than one year, which are then selected by MSCI for certain ESG criteria. The exclusion screening process includes removing corporate bonds that the index provider determines to be involved in, and / or deducting threshold income amounts from certain business segment activities related to:
Agricultural / Environmental:
- Genetically modified organism
- Thermal coal
Select the vices:
- Adult entertainment
- the tobacco
Weapon / War:
- Civilian firearms
- Nuclear, controversial and conventional weapons
- Nuclear power
In addition to these screens, Bloomberg and MSCI will exclude corporate bonds that do not meet certain diversity criteria or any corporate bonds that, as determined by the Index provider, do not meet certain standards defined by the evaluation of the ESG controversies of the Index provider. , which measures a company’s involvement in major ESG controversies by assessing various factors such as environmental impact, labor rights, human rights, impact on the community, governance and respect of the principles of the United Nations Global Compact. These ESG screens are continuously assessed and applied to the universe of investable US corporate bonds in order to determine the appropriate representation of eligible securities. Given the Bloomberg and MSCI exclusion selection process, the fund may perform differently from the broader market.
Managed by a leading fixed income advisor
Vanguard’s Fixed Income Group, one of the world’s largest fixed income investment managers, will act as advisor to the ETF.3 Vanguard’s fixed income indexing capabilities date back to 1986, with the launch of the very first bond index fund, the Vanguard Total Bond Market Index Fund (VBTLX). Since its creation in 1981, the Fixed Income Group has steadily expanded its capacity to manage active and indexed national and international bonds, municipal bonds, money market securities and stable value assets. Today, the team is made up of 180 global investment professionals who oversee nearly $ 1.9 trillion in global fixed income assets.
Josh barrickman, Senior Director, Senior Portfolio Manager and Head of Vanguard Fixed Income Indexing Americas, will manage the ETF. Mr. Barrickman has been with Vanguard for 22 years and has over 15 years of experience in the fixed income industry.
Vanguard is one of the largest investment management companies in the world. From August 31, 2020, Vanguard managed $ 6.6 trillion in global assets. The company, headquartered in Valley Forge, Pennsylvania, offers 422 funds to more than 30 million investors worldwide. For more information, visit vanguard.com.
All data at August 31, 2020 unless otherwise stated
1 The average expense ratio for ethically-focused fixed income funds is 0.72% according to Lipper, a Thomson Reuters company. Data as of March 31, 2020.
2 Source, Morningstar
3 Source, Vanguard
For more information on Vanguard funds, visit vanguard.com for a prospectus or, if available, a summary prospectus. The investment objectives, risks, charges, expenses and other important information about a fund are contained in the prospectus; read it carefully before investing. Copies of the prospectus can be obtained from Vanguard
Vanguard ETF Shares may only be redeemed from the issuing fund in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and pay more than the NAV when buying and receive less than the NAV when selling.
Any investment is subject to risk, including the possible loss of the money you invest. Investments in bonds are subject to interest rate, credit and inflation risk. Diversification does not ensure a profit or protect against a loss.
ESG funds are subject to ESG investment risk, i.e. the probability that the stocks or bonds selected by the index sponsor for ESG criteria will generally underperform the market as a whole or that the Selected stocks or bonds, on the whole, have lower returns. other funds selected for ESG criteria.
BLOOMBERG® is a trademark of Bloomberg Finance LP. or its affiliates. BARCLAYS® is a trademark and service mark of Barclays Bank Plc (collectively with its subsidiaries, “Barclays”). MSCI® is a trademark and service mark of MSCI, Inc. (collectively with its subsidiaries, including MSCI ESG Research LLC (“MSCI ESG”), “MSCI”). These marks are used under license. Bloomberg Finance LP and its affiliates, including Bloomberg Index Services Limited (“BISL”) (collectively, “Bloomberg”), or the Bloomberg licensors own all ownership rights in the Bloomberg Barclays MSCI US Corporate SRI Index Select SM (“Index”) which Index is determined, composed and calculated by BISL, or any successor to it, based on environmental, social and governance research provided by MSCI ESG.
Neither Bloomberg, Barclays nor MSCI are affiliated with Vanguard as an issuer of the Vanguard ESG US Corporate Bond ETF, and neither Bloomberg, Barclays nor MSCI endorse, approve, review or recommend the Vanguard ESG US Corporate Bond ETF. Bloomberg, Barclays and MSCI do not guarantee the timeliness, accuracy or completeness of any data or information relating to the Index, and neither can be held liable in any way to the Issuer, investors in the Vanguard ESG US Corporate Bond ETF or other third parties with respect to the use or accuracy of the Index or any data included therein.
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