Vanguard has stepped up competition in the sustainable fund space with the launch of four actively managed strategies – a move that suggests the fund group is finally getting up to speed on ESG.
On 08 December 2021, the asset manager unveiled the Vanguard Sustainablelife range, comprising three multi-asset funds, and the Vanguard Global Sustainable Equity fund.
Sustainablelife is an actively-managed range, including a 40-50% equity, 60-70% equity and 80-90% equity option. All three funds are managed by Wellington Management Company and invest in global equities and bonds, with an ongoing charges figure of 0.48%.
The range applies ESG criteria to each of the companies it invests in based on four sustainability principles: a commitment to net zero by 2050; exclusion of companies involved in areas such as thermal coal, tar sands and tobacco; engagement with portfolio companies on material ESG issues; and for companies to follow good governance practices as a precondition for investment.
The Global Sustainable Equity fund invests in global companies, while actively incorporating sustainable investment criteria. The fund is also managed by Wellington and has a commitment to net zero emissions by 2050, as well as an OCF of 0.48%.
The firm now has 10 ESG funds and ETFs available to UK investors.
Vanguard head of ESG strategy, Europe, Fong Yee Chan said: “Today’s launch represents our commitment to helping investors balance their personal values with their financial goals as interest in sustainable investing continues to grow.”
Ethical alternative
Interactive Investor (II) head of funds research Dzmitry Lipski said Vanguard has been slow to embrace a sustainable investing range, so these launches fill an important gap in its offering and are very welcome.
“At first glance, the Vanguard Sustainablelife range looks like a good ethical, active alternative to the hugely successful Lifestrategy range, and the similarities in the names are clearly deliberate.
“If that doesn’t shake up competition in the market, nothing will.”
Not the cheapest
Vanguard is known for its low-cost funds but Lipski noted the new range is not the cheapest on the market.
“The BMO Sustainable Map range, for example, has an ongoing charge of 0.35% on II, versus 0.48% for the new Vanguard Sustainablelife launch.
“That said, Vanguard do have a history of slashing costs as assets increase, and while ethical investing does not have to be a race to the bottom on costs, charges do matter.”
Lipski said having Wellington behind the funds brings institutional quality management to retail investors.
“Competition for sustainable funds has just stepped up a gear, and this is great news for investors.”
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