We now offer two additional fixed income ETFs offering diversified exposure to regional segments of the global bond market which can be used as building blocks for ESG-aware portfolios.

Vanguard has launched two new fixed income exchange-traded funds (ETFs) for investors who wish to invest with both their financial goals and environmental, social and governance (ESG) preferences in mind.

The Vanguard ESG EUR Corporate Bond UCITS ETF and the Vanguard ESG USD Corporate Bond UCITS ETF are designed to provide diversified exposure to different segments of the bond market and are suitable as regional building blocks for ESG-aware portfolios.

Corporate bonds are a type of loan issued by companies which typically pay investors a regular fixed income (coupon) and return the principal amount on maturity. These ETFs invest in investment-grade corporate bonds, which are the corporate bonds with the highest credit quality according to credit ratings agencies.

They follow the recently launched Vanguard ESG Developed Asia Pacific All Cap UCITS ETF, the Vanguard ESG Emerging Markets All Cap UCITS ETF, the Vanguard ESG Developed Europe All Cap UCITS ETF and the Vanguard ESG North America All Cap UCITS ETF to help investors construct broader ESG-orientated index portfolios.

Together, these ETFs offer regional building blocks to provide global exposure and maintain broad diversification at low cost.

The Vanguard ESG EUR Corporate Bond UCITS ETF tracks the performance of the Bloomberg MSCI EUR Corporate Liquid Bond Screened Index. The ETF does this by buying a representative sample (a process known as ‘sampling’) of a euro-denominated portfolio of investment-grade corporate fixed-rate bonds. The ETF has an ongoing charges figure (OCF) of 0.11%1.

The Vanguard ESG USD Corporate Bond UCITS ETF tracks the performance of the Bloomberg MSCI USD Corporate Float-Adjusted Liquid Bond Screened Index, using a sampling process to invest in a US dollar-denominated portfolio of investment-grade corporate fixed-rate bonds. The ETF has an OCF of 0.11%1.

Vanguard’s exclusionary ESG ETFs promote environmental and social characteristics by excluding companies from their portfolios that are involved with weapons, non-renewable energy and vice products2.

The ETFs also exclude bond issuers deemed by MSCI, one of the index providers, to be involved in very severe ESG controversies or ‘red flags’. Further details are available on the product pages for the Vanguard ESG EUR Corporate Bond UCITS ETF and the Vanguard ESG USD Corporate Bond UCITS ETF.

As well as helping investors to avoid certain ESG risks, Vanguard’s exclusionary ESG index products enable investors to invest in line with their ESG preferences, while retaining the key attributes of Vanguard’s index funds: diversification, transparency and low costs.

With the addition of the two new ETFs, Vanguard’s line-up of funds for environmentally and socially conscious investors consists of the funds and ETFs listed below.

Fund Name

Strategy

Domicile

Vanguard ESG Emerging Markets All Cap UCITS ETF

Index

Ireland

Vanguard ESG Developed Asia Pacific All Cap UCITS ETF

Index

Ireland

Vanguard ESG Developed Europe All Cap UCITS ETF

Index

Ireland

Vanguard ESG North America All Cap UCITS ETF

Index

Ireland

Vanguard ESG Global All Cap UCITS ETF

Index

Ireland

Vanguard ESG Developed World All Cap Equity Index Fund (UK)

Index

UK

Vanguard ESG Developed World All Cap Equity Index Fund

Index

Ireland

Vanguard ESG Emerging Markets All Cap Equity Index Fund

Index

Ireland

Vanguard SRI European Stock Fund

Index

Ireland

Vanguard ESG Global Corporate Bond UCITS ETF

Index

Ireland

Vanguard ESG EUR Corporate Bond UCITS ETF

Index

Ireland

Vanguard ESG USD Corporate Bond UCITS ETF

Index

Ireland

Vanguard SustainableLife 40-50% Equity Fund

Active

UK

Vanguard SustainableLife 60-70% Equity Fund

Active

UK

Vanguard SustainableLife 80-90% Equity Fund

Active

UK

Vanguard Global Sustainable Equity Fund

Active

UK

To find out more about investing in line with your principles, read our guide to navigating your ESG options.

 

Source: Vanguard. Data as at 17 November 2022. The OCF covers administration, audit, depository, legal, registration and regulatory expenses incurred in respect of the funds.

2 The indices which the ETFs track follow the same general criteria as their parent indices, but remove issuers with ties to thermal coal, oil and gas or issuers that are involved in certain controversial business lines. Companies are screened for both primary (e.g., producer/manufacturer) and secondary (e.g., retailer/supplier) involvement in the exclusion categories using revenue thresholds. There are three levels of restrictiveness—least, moderate and most restrictive—based on different revenue thresholds. The exception is fossil fuels, for which companies are screened based on Industry Classification Benchmark (ICB) sector classification rather than revenue-based thresholds. The ICB is a rules-based, transparent classification methodology for assigning all public companies to appropriate subsectors of specific industries. More detail on the screening methodology can be found in the Vanguard Funds plc prospectus available on global.vanguard.com.

Investment risk information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

Some funds invest in emerging markets which can be more volatile than more established markets. As a result, the value of your investment may rise or fall.

Funds investing in fixed interest securities carry the risk of default on repayment and erosion of the capital value of your investment and the level of income may fluctuate. Movements in interest rates are likely to affect the capital value of fixed interest securities. Corporate bonds may provide higher yields but as such may carry greater credit risk increasing the risk of default on repayment and erosion of the capital value of your investment.

Income may fluctuate in accordance with market conditions and taxation arrangements.

ETF shares can be bought or sold only through a broker. Investing in ETFs entails stockbroker commission and a bid- offer spread which should be considered fully before investing.

The funds may use derivatives in order to reduce risk or cost and/or generate extra income or growth. The use of derivatives could increase or reduce exposure to underlying assets and result in greater fluctuations of the Fund's net asset value. A derivative is a financial contract whose value is based on the value of a financial asset (such as a share, bond, or currency) or a market index.

Some funds invest in securities which are denominated in different currencies. Movements in currency exchange rates can affect the return of investments.

For further information on risks please see the “Risk Factors” section of the prospectus on our website at https://global.vanguard.com

Important information

This article is designed for use by, and is directed only at persons resident in the UK.

If you have any questions related to your investment decision or the suitability or appropriateness for you of the product[s] described in this article, please contact your financial adviser.

For further information on the fund's investment policies and risks, please refer to the prospectus of the UCITS and to the KIID before making any final investment decisions. The KIID for this fund is available, alongside the prospectus via Vanguard’s website https://www.vanguardinvestor.co.uk.

The information contained in this article is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information in this article is general in nature and does not constitute legal, tax, or investment advice. Potential investors are urged to consult their professional advisers on the implications of making an investment in, holding or disposing of shares and /or units of, and the receipt of distribution from any investment.

Vanguard Funds plc has been authorised by the Central Bank of Ireland as a UCITS and has been registered for public distribution in certain EEA countries and the UK. Prospective investors are referred to the Funds' prospectus for further information. Prospective investors are also urged to consult their own professional advisers on the implications of making an investment in and holding or disposing shares of the Funds and the receipt of distributions with respect to such shares under the law of the countries in which they are liable to taxation.

The Manager of Vanguard Funds plc is Vanguard Group (Ireland) Limited. Vanguard Asset Management, Limited is a distributor for Vanguard Funds plc.

The Authorised Corporate Director for Vanguard Investment Funds ICVC is Vanguard Investments UK, Limited.  Vanguard Asset Management, Limited is a distributor of Vanguard Investment Funds ICVC.

The Manager of the Ireland domiciled funds may determine to terminate any arrangements made for marketing the shares in one or more jurisdictions in accordance with the UCITS Directive, as may be amended from time-to-time.

The Indicative Net Asset Value (“iNAV”) for Vanguard’s ETFs is published on Bloomberg or Reuters. Refer to the Portfolio Holdings Policy at https://fund-docs.vanguard.com/portfolio-holdings-disclosure-policy.pdf

For investors in Ireland domiciled funds, a summary of investor rights can be obtained via https://www.ie.vanguard/content/dam/intl/europe/documents/en/vanguard-investors-rights-summary-irish-funds-jan22.pdf and is available in English, German, French, Spanish, Dutch and Italian.

For investors in UK domiciled funds, a summary of investor rights can be obtained via https://www.vanguard.co.uk/content/dam/intl/europe/documents/en/Vanguard-InvestorsRightsSummaryUKFUNDSJan22.pdf and is available in English.

“BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. MSCI is a trademark and service mark of MSCI Inc. (collectively with its affiliates, “MSCI”), used under license. Bloomberg Finance L.P. and its affiliates (collectively, “Bloomberg”), including Bloomberg Index Services Limited, the index administrator (“BISL”), or Bloomberg’s licensors, including MSCI, own all proprietary rights in the Bloomberg MSCI USD Corporate Float-Adjusted Liquid Bond Screened Index and the Bloomberg MSCI EUR Corporate Liquid Bond Screened Index. Neither Bloomberg nor MSCI is affiliated with Vanguard and neither Bloomberg nor MSCI approves, endorses, reviews or recommends the Vanguard ESG USD Corporate Bond UCITS ETF or the Vanguard ESG EUR Corporate Bond UCITS ETF. Neither Bloomberg nor MSCI guarantees the timeliness, accurateness or completeness of any data or information relating to the Bloomberg MSCI USD Corporate Float-Adjusted Liquid Bond Screened Index and the Bloomberg MSCI EUR Corporate Liquid Bond Screened Index and none shall be liable in any way to Vanguard, investors in the Vanguard ESG USD Corporate Bond UCITS ETF or the Vanguard ESG EUR Corporate Bond UCITS ETF or other third parties in respect of the use or accuracy of the Bloomberg MSCI USD Corporate Float-Adjusted Liquid Bond Screened Index and the Bloomberg MSCI EUR Corporate Liquid Bond Screened Index or any data included therein.

Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.

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