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March 07, 2019 at 04:10 PM
Vanguard plans to introduce its first actively managed environmental, social and governance focused fund midyear. The Global ESG Select Stock Fund will be managed by Wellington Management Co., which manages many active Vanguard funds, with the goal of outperforming the FTSE All-World Index.
The fund will invest in approximately 40 stocks of companies that it believes have strong fundamentals, proven management teams and “exemplary longstanding ESG practices” with the intention of holding those stocks for “an extended period of time,” according to Vanguard.
Wellington, which currently manages more than $336 billion in stock and bond assets for Vanguard, will not only manage the new ESG-focused fund but also vote its proxy shares and oversee direct engagements with companies.
“That gets Vanguard off the hook,” writes Dan Weiner, editor of The Independent Adviser for Vanguard Investors and co-founder of Adviser Investments.
The Vanguard Global ESG Select Stock Fund will charge an expense ratio of 45 basis points for Admiral shares, which require a $50,000 minimum, and 55 basis points for Investor shares, which require a $3,000 investment.
Those fees are “cheap for active but premium to ESGV,” tweeted Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA, referring to the passive Vanguard ESG U.S. Stock fund, which charges 12 basis points.
Vanguard has two other passive index-linked ESG funds: Vanguard FTSE Social Index Fund (VFTAX) and Vanguard ESG International Stock ETF (VSGX), which charge 14 and 15 basis points, respectively.
