Vanguard adds North America and Europe ESG ETFs

Vanguard has expanded its suite of socially responsible equity ETFs in Europe with the addition of two new funds targeting stocks from developed markets in North America and Europe.

The Vanguard ESG North America All Cap UCITS ETF and Vanguard ESG Developed Europe All Cap UCITS ETF are designed to serve as core building blocks for ESG-aware portfolios, providing broad diversification while screening out undesirable issuers based on index provider FTSE Russell’s ‘Choice’ framework.

The funds may appeal to ethically minded investors who prefer the straightforward approach of excluding firms from controversial industries compared to some of the more complex, “over-engineered” ESG products on the market.

Commenting on the new listings, Fong Yee, Head of ESG strategy, UK and Europe, Vanguard, said: “Today’s launches are the start of a new stage of our commitment to 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.”

The Vanguard ESG North America All Cap UCITS ETF has been listed on London Stock Exchange in US dollars (Acc: V3NA LN; Dist: V3NL LN) and pound sterling (Acc: V3NB LN; Dist: V3NM LN), on SIX Swiss Exchange in Swiss francs (Acc: V3NA SW), and on Xetra (Acc: V3YA GY; Dist: V3YL GY), Euronext Amsterdam (Acc: V3NA NA; Dist: V3NL NA), and Borsa Italiana (Acc: V3NA IM; Dist: V3NL IM) in euros.

The Vanguard ESG Developed Europe All Cap UCITS ETF, meanwhile, has been listed on London Stock Exchange in pound sterling (Acc: V3EA LN; Dist: V3EL LN), on SIX Swiss Exchange in Swiss francs (Acc: V3EA SW), and on Xetra (Acc: V3DA GY; Dist: V3DL GY), Euronext Amsterdam (Acc: V3EA NA; Dist: V3EL NA), and Borsa Italiana (Acc: V3EA IM; Dist: V3EL IM) in euros.

Each ETF comes with an expense ratio of 0.12% and is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).

The new listings complement the Vanguard ESG Global All Cap UCITS ETF (V3AL) which debuted in March 2021 and covers stocks from across developed and emerging markets worldwide. The fund currently houses $350 million and has an expense ratio of 0.24%.

Methodology

The new ETFs’ underlying indices – the FTSE North America All Cap Choice Index and FTSE Developed Europe All Cap Choice Index – start with initial universes comprising large, mid, and small-cap stocks within their respective regions.

Companies that do not satisfy UN Global Compact principles relating to labour, human rights, environmental, and anti-corruption standards are excluded.

The indices also remove firms deriving significant revenue from non-renewable energy (coal, oil, or gas), nuclear power, adult entertainment, alcohol, tobacco, gambling, and weapons (controversial, military, and conventional).

Following these screening steps, the remaining constituents are weighted by market capitalization. Rebalancing occurs on a quarterly basis.