The goal of this new mutual fund is to outperform the broad global stock market by investing in a highly selective stock portfolio, representing approximately 40 companies. The fund is expected to hold stocks over an extended time horizon, resulting in low turnover.
There’s nothing passive about this ESG fund.
“The fund’s approach to ESG investing is distinctive in that it seeks to achieve long-term outperformance through the selection of companies that integrate leading ESG practices into their corporate strategies,” said Matthew Brancato, head of Vanguard Portfolio Review Department.
To manage the fund, we’ve selected Wellington Management Company LLP, our oldest and largest external advisory partner, for its successful track record in developing ESG investment strategies for more than a decade.
2-week subscription period starts
From May 21 through June 4, the fund is in a subscription period, during which all Investor Shares are available for $20 per share and all Admiral™ Shares are available for $25 per share. The money is held temporarily in money market investments or cash.
Starting on June 5, Wellington Management will use the money gathered during the subscription period to begin investing in stocks according to the fund’s strategy. At that time, you can expect to see share prices begin to fluctuate based on how the fund’s underlying investments are performing.
Actively managed with an integrated approach
The Global ESG Select Stock Fund joins 3 other Vanguard ESG funds—1 index mutual fund and 2 index ETFs (exchange-traded funds)—but differs in 2 important ways: It’s actively managed, and it follows an integrated strategy that emphasizes companies with leading ESG practices.
A look at the fund attributes
Vanguard Global ESG Select Stock Fund
Other Vanguard ESG funds
Actively managed: Its objective is to beat the returns of its benchmark index.
Indexed: They try to track the returns of their benchmark index.
Integrated: It combines traditional financial analysis and research with a deep evaluation of a company’s ESG policies.
Exclusionary: They broadly eliminate companies that operate in sectors like fossil fuels or tobacco based on ESG criteria.
Wellington Management targets companies with strong business fundamentals, leading ESG practices, and a proven track record of using their financial resources to maximize profits. Starting with a blank slate, Wellington Management searches for companies that it identifies as having the highest ESG standards across the full range of industries.
- An integrated ESG fund might invest in an energy company, after considering its financial fundamentals and its eye toward managing the environmental effects of its products and services.
- An integrated ESG fund wouldn’t invest in an insurer that neglects to consider the effect of climate change on future claims or a manufacturer that fails to prioritize workplace safety.
Experienced fund management
Wellington Management currently manages 7 ESG-oriented funds that follow exclusionary or integrated strategies. On behalf of Vanguard clients, the firm oversees more than $360 billion across 25 mutual funds and annuity portfolios.*
With proprietary investment and ESG research, Wellington Management uses a qualitative assessment of a company’s business strategies and ESG policies to focus on where companies are heading.
The commitment to a limited portfolio of stocks of large and mid-size companies around the world, including emerging markets, means Wellington Management can develop deep relationships with a company’s management team. Through this engagement, Wellington Management believes it can actively monitor a company’s performance and commitment to leading ESG practices.
The Global ESG Select Stock Fund & your portfolio
The fund is designed to complement an already balanced, diversified portfolio. If you’re a long-term investor comfortable with the added risk of an actively managed and less-diversified mutual fund, it may be attractive to you. It may not be a good match if you want to avoid certain industries, geographic regions, or companies that you feel are at odds with your values. Although the fund will seek to outperform its benchmark, be aware of the risk of underperformance.
Cost & minimums
Minimum investment requirement
Estimated expense ratio
Estimated expense ratios for Investor and Admiral Shares are 26% and 39% lower than the industry averages.**
The fund will seek to outperform the FTSE All-World Index, a broad benchmark for large and mid-size global stocks, over the long term.
In addition to investment advisory responsibilities, Wellington Management is responsible for governance activities for the fund, enabling the fund’s managers to fully integrate proxy voting and company engagements into the fund’s investment strategy.
*As of March 31, 2019.
**Based on Morningstar asset-weighted average of 0.74%, as of March 31, 2019, for actively managed funds labeled “socially conscious.”
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 stocks issued by non-U.S. companies and governments are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets.