Explore ways to match your money with your values!
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.
*Source: Morningstar, Inc., 2020.
A registration statement relating to Vanguard ESG U.S. Corporate Bond ETF Shares has been filed with the Securities and Exchange Commission (SEC) but has not yet become effective. The SEC has not approved or disapproved this security or passed upon the adequacy of this prospectus. Any representation to the contrary is considered a criminal offense. This security may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of this security in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
For more information about Vanguard funds or Vanguard ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. Copies of the final prospectus can be obtained from Vanguard. Please note that a preliminary prospectus is subject to change.
Vanguard ETF Shares are not redeemable with the issuing fund other than 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 may pay more than net asset value when buying and receive less than net asset value when selling.
ESG funds are subject to ESG investment risk, which is the chance that the stocks or bonds screened by the index sponsor for ESG criteria generally will underperform the market as a whole or that the particular stocks or bonds selected will, in the aggregate, trail returns of other funds screened for ESG criteria.
All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Investments in bonds are subject to interest rate, credit, and inflation risk.
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