Vanguard gets into the active [ESG] fund business - VEIGX

[traveler]

Vanguard just announced a new fund that will try to beat an index (FTSE All-World Index) by investing actively in 40 "companies with leading environmental, social, and governance (ESG) programs".

Source: https://investornews.vanguard/how-vanguards-new-actively-managed-esg-fund-can-fit-into-your-portfolio/

From prospectus:

Principal Investment Strategies
Under normal circumstances, at least 80% of the Fund’s assets will be invested in common stocks of companies that meet the advisor’s environmental, social, and governance (ESG) criteria. The Fund will typically invest in stocks of large and mid-size companies located in a number of countries throughout the world, including issuers located in emerging markets.
The Fund’s investment approach is based on proprietary, bottom-up fundamental research conducted by the advisor. The advisor considers the investment universe, sector-by-sector and region-by-region, looking for companies with strong long-term fundamentals that also meet the advisor's ESG criteria. The advisor will place an emphasis on the following company attributes: (1) a proven track record of effective capital allocation; (2) leading ESG practices as determined by the advisor through an evaluation of how the company integrates material ESG risks and opportunities into its corporate strategy (e.g., a realistic assessment of long-term ESG risks and opportunities, increased transparency into the company's ESG practices, management teams with aligned incentives, better governance practices, and thoughtful resource allocation); and (3) confidence that a wide gap between return on capital and cost of capital can be sustained. The advisor will then examine issues outside the scope of traditional research—such as corporate culture, adaptability, and employee engagement—to build conviction in each holding.

The fund will have a 0.55% expense ratio for Investor shares (min 3K), and 0.45% for Admiral ( min 50K).


I'd like to hear the take of this forum on this, especially since I would have never expected Vanguard to get into the active business. (Edit: Vanguard has been in the active funds business for a long while. This news is for their first ESG actively managed fund. )

[dandarc]

Vanguard has always had actively managed funds in addition to the index offerings. This fund - not enough diversification for me.  I'll stick with my 3 fund portfolio.

[traveler]

Vanguard has always had actively managed funds in addition to the index offerings.

Ah, I had missed that completely. I guess I never looked at their full index list. Here is the list, for completeness: https://investor.vanguard.com/mutual-funds/list#/mutual-funds/asset-class/month-end-returns.

I guess what the they meant in their news is "first ESG active fund".

[Another Reader]

Vanguard has always had actively managed funds.  This fund is managed by Wellington, who also manages Wellesley, Wellington, a health care fund (VGHCX), a dividend oriented fund (VDIGX), and an energy fund (VGENX) for Vanguard.  The relationship with Wellington has existed for decades.

[traveler]

Vanguard has always had actively managed funds.  This fund is managed by Wellington, who also manages Wellesley, Wellington, a health care fund (VGHCX), a dividend oriented fund (VDIGX), and an energy fund (VGENX) for Vanguard.  The relationship with Wellington has existed for decades.

Right. Edited post and title to fix that.