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Vanguard to Launch Its First Impact Fund

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What You Need to Know

  • The Vanguard Baillie Gifford Global Positive Impact Stock Fund will be an active sub-advised equity fund.
  • It will be formed from the Baillie Gifford Positive Change Equities Fund after those investors approve the change.
  • The new fund will be Vanguard's first impact fund and second active ESG fund; its expected fee is 0.59%.

Vanguard is planning to launch its first impact mutual fund, the Vanguard Baillie Gifford Global Positive Impact Stock Fund, designed to generate positive returns while having a positive social and/or environmental impact.

The $8.2 trillion fund giant has filed an initial registration statement with the Securities and Exchange Commission for the Vanguard Baillie Gifford Global Positive Impact Stock Fund, an active equity fund whose concentrated portfolio will be managed by Baillie Gifford, one of several current Vanguard subadvisors.

Baillie Gifford manages the Baillie Gifford Positive Change Equities Fund, which will be converted into the Vanguard Baillie Gifford fund once its shareholders approve the tax-free reorganization through a proxy vote. Vanguard expects the new impact fund will be available for public investment in the third quarter of this year.

“We’ll continue to thoughtfully expand our ESG lineup, introducing funds and ETFs with enduring investment merit that reflect clients’ needs and preferences,” said Vanguard Chairman and CEO Tim Buckley, in a statement. “The new Global Positive Impact Stock Fund will tap Baillie Gifford’s significant expertise in fundamental equity research and impact analysis, helping our clients to achieve both their impact and investment goals.”

The new fund will be Vanguard’s second active ESG-focused fund and the sixth in its ESG lineup, whose assets, as of year-end 2021, totaled $27.5 billion.

The Vanguard Baillie Gifford Global Positive Impact Stock Fund will maintain the investment objectives and portfolio management team of the existing Baillie Gifford fund, partner Kate Fox and portfolio manager Lee Qian.

According to the SEC filing, Baillie Gifford uses a bottom-up approach to identify between 25 and 50 growth companies with the potential to outperform the MSCI All Country World Index and the ambition to deliver positive change in education, health care, quality of life, the environment and in addressing the needs of the world’s poorest populations.

It is expected to have an expensive ratio of 0.59%, six basis points below the Baillie Gifford Positive Change Equity Fund, which is rated five stars by Morningstar.

“We hope this fund adoption will broaden access to impact investing at a very competitive cost,” said Andrew Telfer, Joint senior partner at Baillie Gifford.