Vanguard has introduced its first ESG-considered fixed income ETF in Europe with the launch of the Vanguard ESG Global Corporate Bond UCITS ETF.
Fong Yee Chan, Head of ESG strategy, UK and Europe, Vanguard.
Listed on multiple exchanges in Europe, the fund has been designed to serve as a core building block for socially responsible portfolios, providing broad diversification while incorporating robust screening based on environmental, social, and governance criteria.
It is linked to the Bloomberg Barclays MSCI Global Corporate Float-Adjusted Liquid Bond Screened Index which is based on the parent Bloomberg Barclays Global Aggregate Float Adjusted Corporate Index.
The parent index represents a multi-currency universe of investment-grade fixed-rate corporate bonds from both developed and emerging markets issuers. Eligible issues must have at least one year remaining until maturity and an issue size greater than or equal to a specific currency minimum – this is $750m, £300m, and €500m for major global currencies.
The ESG screening methodology harnesses insights from MSCI ESG Research to remove issuers in violation of UN Global Compact principles as well as those deriving any revenue from adult entertainment, alcohol, gambling, tobacco, nuclear weapons, controversial weapons, conventional weapons, civilian firearms, nuclear power, genetically modified organisms, or fossil fuels.
The remaining issuers are weighted by market value, and the index is rebalanced on a monthly basis.
The ETF comes with an expense ratio of 0.15% and is available in a range of share classes. These include USD-hedged (Dist: V3GD LN; Acc: V3GU LN) and GBP-hedged (Dist: V3GP LN; Acc: V3GS LN) listings on London Stock Exchange, EUR-hedged listings on Xetra (Dist: V3GE GY; Acc: V3GF GY) and Borsa Italiana (Dist: V3GE IM; V3GF IM), and CHF-hedged listings on SIX Swiss Exchange (Dist: V3GH SW; Acc: V3GX SW).
Fong Yee Chan, Head of ESG Strategy, UK and Europe, Vanguard, 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 launch comes two months after Vanguard debuted its first ESG ETF in Europe with the listing of the Vanguard ESG Global All Cap UCITS ETF on LSE and Xetra. This fund tracks the FTSE Global All Cap Choice Index providing broad exposure to developed and emerging market stocks while screening out UN Global Compact violators and firms operating in controversial industries. It comes with an expense ratio of 0.24% and has so far amassed $100 million in assets.