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Financial management

Our new environment-focused ESG fund

4 minute read
  •  
November 02, 2022
Financial management
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ESGs
Active funds

Interested in an active environment-centered ESG fund? Then we have an exciting announcement: Vanguard is introducing a new active ESG stock fund to our ESG fund lineup.

What makes this fund special?

Vanguard Global Environmental Opportunities Stock Fund targets the “E” in ESG (environmental, social, and governance). It takes a structured, research-driven approach to investing that targets companies seeking to accelerate the transition to a low-carbon world. Changes in consumer preferences and global efforts to reduce emissions could create investment opportunities in companies focused on transitioning to a lower-carbon economy. This active fund invests in approximately 25 companies involved in activities including:

Within these categories, the fund invests in companies that are involved in the process of decarbonization and derive at least half of their revenue from activities deemed by the fund’s advisor to contribute positively to environmental change. Ninety One believes companies that successfully navigate this transition are likely to create value for investors over the long term.

Who is Ninety One?

We chose Ninety One North America, Inc., to manage this fund because they're a global investment manager focused on active investments and have a proven track record in environment-focused investing. Their advantages also include:

  • Significant experience investing in natural resources and renewable energy technologies.
  • Access to internal resources and extensive partnerships with leading climate research organizations.
  • Deep knowledge of the economic and investment implications of the energy transition.
  • A research-driven process that goes deep into opportunities focused on global decarbonization across the value chain.
  • Consistent engagement with portfolio companies and sustainability reporting capabilities.

We’re excited to work with our new partners at Ninety One to provide you with a unique opportunity in active ESG investing.

How does the fund fit into our ESG lineup (and your portfolio)?

Vanguard Global Environmental Opportunities Stock Fund may be most appropriate for clients with a high risk tolerance and long time horizon who seek to outperform the market and care about environment-focused investing. While we don’t view this fund as a typical core holding, investors can use it to complement an already broadly diversified portfolio or together with our other ESG funds.

The Global Environmental Opportunities Stock Fund is our first fund with an environment-focused mandate, our second inclusionary fund, and our third active ESG fund. Our ESG lineup now includes 3 active funds (2 inclusionary funds and 1 impact fund) and 4 index funds (all exclusionary).

Active ESG funds


Inclusionary

Invests in companies the fund manager believes will outperform while meeting their specific ESG criteria.

Vanguard Global ESG Select Stock Fund
Vanguard Global Environmental Opportunities Stock Fund

Impact

Has an explicit dual mandate to produce a financial return and a measurable positive impact.

Vanguard Baillie Gifford Global Positive Impact Stock Fund

Index ESG funds


Exclusionary

Excludes certain sectors or industries based on business involvement or activities.

Vanguard FTSE Social Index Fund
Vanguard ESG U.S. Stock ETF
Vanguard ESG International Stock ETF
Vanguard ESG U.S. Corporate Bond ETF

Here are details about our other 2 active ESG funds:

  • Vanguard Global ESG Select Stock Fund is designed for clients who want to invest in companies that employ leading stewardship practices that contribute to their strong business fundamentals.
  • Vanguard Baillie Gifford Global Positive Impact Stock Fund focuses on a strategy that targets both investment and positive impact objectives.

Learn more about our Global Environmental Opportunities Stock Fund to see if it’s the right fit for you and your portfolio.

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All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk.

ESG funds are subject to ESG investment risk, which is the chance that the stocks or bonds screened by the index provider or advisor, as applicable, for ESG criteria generally will underperform the market as a whole or, in the aggregate, will trail returns of other funds screened for ESG criteria. The index provider or advisor’s assessment of a company, based on the company’s level of involvement in a particular industry or their own ESG criteria, may differ from that of other funds or an investor’s assessment of such company. As a result, the companies deemed eligible by the index provider or advisor may not reflect the beliefs and values of any particular investor and may not exhibit positive or favorable ESG characteristics. The evaluation of companies for ESG screening or integration is dependent on the timely and accurate reporting of ESG data by the companies. Successful application of the screens will depend on the index provider or advisor's proper identification and analysis of ESG data. The advisor may not be successful in assessing and identifying companies that have or will have a positive impact or support a given position. In some circumstances, companies could ultimately have a negative or no impact or support of a given position.

You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free) or through another broker (which may charge commissions). See the Vanguard Brokerage Services commission and fee schedules for full details. Vanguard ETF Shares are not redeemable directly with the issuing fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or receive the current market price, which may be more or less than net asset value.

For more information about Vanguard funds or Vanguard ETFs, obtain a mutual fund or an ETF prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.