Vanguard has launched two new exchange-traded funds (ETFs) for investors who want to mitigate certain environmental, social and governance-related (ESG) risks and to avoid or reduce exposure to companies that don’t align with their ESG preferences.

The Vanguard ESG Developed Europe All Cap UCITS ETF and the Vanguard ESG North America All Cap UCITS ETF are designed to serve as core building blocks for ESG-aware portfolios, offering a combination of global and regional exposure to maintain broad diversification at low cost.

The Vanguard ESG Developed Europe All Cap UCITS ETF tracks the FTSE Developed Europe All Cap Choice Index, providing exposure to large-, mid- and small-cap stocks in developed European countries. The ETF has an ongoing charges figure (OCF) of 0.12%1.

The Vanguard ESG North America All Cap UCITS ETF tracks the FTSE North America All Cap Choice Index, providing exposure to large-, mid- and small-cap stocks in the US and Canada. The ETF has an OCF of 0.12%.

The ETFs promote environmental and social characteristics by excluding companies from the portfolios that are involved with weapons, non-renewable energy and vice products2.

The ETFs also exclude companies that are determined by index provider FTSE to be involved in severe controversies related to the United Nations Global Compact Principles, which cover labour, human rights, the environment and anti-corruption. Further details are available on the product pages for Vanguard ESG Developed Europe All Cap UCITS ETF and Vanguard ESG North America All Cap UCITS ETF.

With today’s launches we are building out a suite of “building block” ESG ETFs, designed to help investors construct ESG ETF portfolios for the long term, at a low cost.

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

OCF3

Vanguard ESG Developed Europe All Cap UCITS ETF

Index

Ireland

0.12%

Vanguard ESG North America All Cap UCITS ETF

Index

Ireland

0.12%

Vanguard ESG Global All Cap UCITS ETF

Index

Ireland

0.24%

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

Index

UK

0.20%

Vanguard ESG Developed World All Cap Equity Index Fund

Index

Ireland

0.20%

Vanguard ESG Emerging Markets All Cap Equity Index Fund

Index

Ireland

0.25%

Vanguard SRI European Stock Fund

Index

Ireland

0.14%

Vanguard ESG Global Corporate Bond UCITS ETF

Index

Ireland

0.15%

Vanguard SustainableLife 40-50% Equity Fund

Active

UK

0.48%

Vanguard SustainableLife 60-70% Equity Fund

Active

UK

0.48%

Vanguard SustainableLife 80-90% Equity Fund

Active

UK

0.48%

Vanguard Global Sustainable Equity Fund

Active

UK

0.48%

 

1 Source: Vanguard. Data as at 16 August 2022. The ongoing charges figure (OCF) covers administration, audit, depository, legal, registration and regulatory expenses incurred in respect of the funds.

2 Companies are screened for both primary (e.g., producer/ manufacturer) and secondary (e.g., retailer/ supplier) involvement in the exclusion categories using revenue thresholds. The exceptions are cannabis and fossil fuels which are screened only for primary involvement. There are three levels of restriction—least, moderate and most restrictive—based on different revenue thresholds.

3 Source: Vanguard. Data as at 16 August 2022. The ongoing charges figure (OCF) covers administration, audit, depository, legal, registration and regulatory expenses incurred in respect of the funds.

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.

Investments in smaller companies may be more volatile than investments in well-established blue-chip companies.

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. The level of income may fluctuate and movements in interest rates are likely to affect the capital value of bonds.

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.

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

Important information

For further information on the fund's investment policy, please refer to the Key Investor Information Document (“KIID”). The KIID and the Prospectus for this fund is available from Vanguard via our website https://www.vanguardinvestor.co.uk.

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

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.

Vanguard Funds plc and Vanguard Investment Series plc have 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 and Vanguard Investment Series plc is Vanguard Group (Ireland) Limited. Vanguard Asset Management, Limited is a distributor for both.

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

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