Explore how ESG investing and our latest fund can play a valuable role in your portfolio
Financial management

New ESG corporate bond ETF launched today

6 minute read
September 24, 2020
Financial management
Company news
Vanguard news

We’re pleased to announce that Vanguard ESG U.S. Corporate Bond ETF (VCEB) is now available. This latest addition to our ESG (environmental, social, and governance) offerings was designed to complement our equity lineup of ETFs and mutual funds, satisfy evolving investor preferences, and enhance our low-cost approach.

ESG investing is a growing category of investment choices that offers a way for you to invest in funds that consider certain environmental, social, and governance issues.

Explore how ESG investing can play a valuable role in your portfolio

“Vanguard has been offering ESG funds for more than 20 years. We believe they are enduring investment options for anyone interested in expressing personal values through investment decisions,” said Kaitlyn Caughlin, head of Vanguard Portfolio Review Department. 

Consider ESG investing if you’re looking to complement your portfolio with funds that reflect what matters most to you. We currently have 5 ESG funds (4 stock and 1 bond) with different investment objectives.   

A closer look at our new ESG bond ETF

The ESG U.S. Corporate Bond ETF is a low-cost, broadly diversified index fund that:

  • Seeks to track the Bloomberg Barclays MSCI US Corporate SRI Select Index, capturing a broad cross section of the U.S. corporate bond market while excluding the bonds of companies whose activities don’t meet specific ESG criteria (such as companies that lack gender diversity on their boards or that invest in certain fossil fuels). Full exclusionary details can be found here.
  • Has a competitive expense ratio of 0.12%, which is significantly lower than the average expense ratio for ethically themed fixed income funds of 0.72% as of March 31, 2020, according to Lipper, a Thomson Reuters Company.
  • Is advised by Vanguard Fixed Income Group, one of the world’s largest fixed income managers with $1.921 trillion in global assets under management as of June 30, 2020.
  • Is managed by Joshua C. Barrickman, CFA, a principal and co-head of Fixed Income Group Indexing Americas in Vanguard Fixed Income Group. Josh has been with Vanguard for 22 years.

How our new ESG bond ETF can fit into your portfolio 

Before making any investments, it’s always best to start with your overall asset allocation—that is, how you’ll divide your money among the different asset classes: stocks, bonds, and cash. The ESG U.S. Corporate Bond ETF complements our ESG stock ETFs and is intended for clients who wish to reflect ESG preferences in the U.S. bond portion of their portfolio.

The new fund invests in U.S. corporate bonds, which make up a portion of the overall fixed income market. Much like the process of applying ESG-based screening to stock selection in equity funds, U.S. corporate bonds are screened and selected through a similar process. You might consider pairing the ESG U.S. Corporate Bond ETF with the 4 bond ETFs listed below to get broader U.S. fixed income market exposure.

Hypothetical illustration of a 70% stock/ 30% bond portfolio

For global diversification, you might also consider adding Vanguard Total International Bond ETF (BNDX) to your portfolio. Vanguard Short-Term Treasury ETF, Vanguard Intermediate-Term Treasury ETF, Vanguard Long-Term Treasury ETF, Vanguard Mortgage-Backed Securities ETF, and Vanguard Total International Bond ETF aren’t screened for ESG criteria.

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

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.

ESG funds are subject to ESG investment risk, which is the chance that the stocks or bonds screened by the index sponsor for ESG criteria generally will underperform the markets as a whole or that the particular stocks or bonds selected will, in the aggregate, trail returns of other funds screened for ESG criteria.

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 bonds are subject to interest rate, credit, and inflation risk. Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk.