Vanguard, the second-largest U.S. issuer of exchange traded funds, said Wednesday it filed plans with the Securities and Exchange Commission (SEC) to possibly list two new ETFs based on environmental, social and governance (ESG) investing strategies.
The ETFs Vanguard filed plans for are the Vanguard ESG U.S. Stock ETF and Vanguard ESG International Stock ETF. The funds are expected to debut in September.
“The adoption of ESG investing has accelerated in recent years, and more investors are looking for opportunities to align their investment choices with their values,” said Jon Cleborne, head of Vanguard’s Portfolio Review Group, in a statement. “Our new ETFs marry Vanguard’s characteristic low-cost, diversified investment approach with a rigorous ESG screening process.”
Details On Vanguard’s ESG ETFs
Both new ETFs will track indexes from FTSE Russell, one of the largest providers of benchmarks for ETFs and index funds.
“Vanguard ESG U.S. Stock ETF will seek to track the FTSE US All Cap Choice Index, a market-cap weighted benchmark comprising large-, mid-, and small-cap U.S. stocks screened on specific environmental, social, and governance criteria,” according to the statement.
The Vanguard ESG International Stock ETF will track the FTSE Global All Cap ex US Choice Index. That is a cap-weighted benchmark that tracks “stocks in developed and emerging international markets (excluding the U.S.) screened on specific environmental, social, and governance criteria,” according to Vanguard.
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Not surprisingly, the new Vanguard ETFs will have low fees. The domestic ESG offering will sport an annual fee of just 0.12%, or $12 on a $10,000 investment, while the ex-US fund will charge 0.15% per year. That makes both among the least expensive ESG funds.
“In the development of the benchmarks, FTSE screens its broad domestic and international stock indexes and excludes stocks of companies in the following industries: adult entertainment, alcohol, tobacco, weapons, fossil fuels, gambling, and nuclear power,” according to Vanguard.
These will be the first ESG ETFs offered by Vanguard.
For more information on socially responsible investment strategies, visit our socially responsible ETFs category.