Vanguard is responding to millennials by offering two new, socially responsible, exchange-traded funds, writes Jeff Blumenthal for the Philadelphia Business Journal.
The two products are Vanguard’s first exchange-traded funds featuring ESG (environmental, social, governance) criteria.
Vanguard filed a preliminary registration statement with the SEC earlier this week to unveil the Vanguard ESG U.S. Stock ETF and Vanguard ESG International Stock ETF. The products, expected to start trading in September, will complement its existing FTSE Social Index Fund.
Vanguard’s Equity Index Group will be the investment advisor for the new funds. According to Vanguard, they will be among the lowest-cost ESG offerings available, with estimated expense ratios of 0.12 percent and 0.15 percent.
The ESG criteria are used by socially conscious investors. The environmental criteria examine how a company’s performance affects the natural environment. Social criteria look at how it manages relationships with its employees, while governance deals with leadership, executive pay, audits, internal controls, and shareholder rights.
Vanguard has seen a substantial uptick in demand for socially responsible investment options, with its $4 billion FTSE Social Index Fund already growing 25 percent in the last 18 months.