Vanguard Australia has unveiled two ‘ethically conscious’ ETFs on Australia Stock Exchange, providing exposure to global aggregate bond and international equity portfolios that have been screened for robust environmental, social, and governance characteristics.
Evan Reedman, Head of Product and Marketing, Vanguard Australia.
Evan Reedman, Head of Product and Marketing, Vanguard Australia, commented, “The adoption of ESG investing has accelerated in recent years, and more investors are looking for opportunities to align their investment choices with their values.
“Our new ETFs marry Vanguard’s characteristic low-cost, diversified investment approach with a rigorous ESG screening process.”
Vanguard has partnered with two separate index providers – Bloomberg Barclays and FTSE Russell – to bring the ETFs to market.
Global aggregate bond
The Vanguard Ethically Conscious Global Aggregate Bond Index Hedged ETF (VEFI AU) tracks the Bloomberg Barclays MSCI Global Aggregate SRI Exclusion Float Adjusted Index which consists of securities issued by governments, government-owned entities, government-guaranteed entities, and investment-grade corporates, as well as securitised assets from around the world.
The index excludes companies with significant business activities involving fossil fuels, alcohol, tobacco, gambling, military weapons and civilian firearms, nuclear power and adult entertainment.
The ETF is hedged to Australian dollars, mitigating the risk of adverse currency movements affecting performance.
It comes with a management expense ratio (MER) of 0.26%. Dividends are distributed to investors on a quarterly schedule.
International equities
The Vanguard Ethically Conscious International Shares Index ETF (VESG AU) tracks the FTSE Developed ex Australia ex Non-Renewable Energy/Vice Products/Weapons Index, part of the new FTSE Global Choice Index Series.
The index methodology screens developed market stocks (excluding Australia), excluding companies with product involvement in fossil fuels, nuclear power, adult entertainment, alcohol, gambling, tobacco, and weapons.
Evan Ong, Managing Director, Asia ETP at FTSE Russell, said, “We are delighted that Vanguard Australia has selected our index for its latest ESG ETF. This new values-based index helps meet the growing demand for integrating ESG preferences into investments. ESG-focused indices constructed using our innovative ‘building block’ approach allow clients to align their values with their portfolios. We expect to see further iterations of new indices being developed within the index series.”
The ETF is exposed to the fluctuating values of foreign currencies, as there will not be any hedging of foreign currencies to the Australian dollar.
The fund’s MER is 0.18%. It also distributes dividends on a quarterly basis.