Social Justification ETFS


Vanguard lists cheap ESG ETFs

Vanguard Australia is rolling out two ESG funds to coincide with the ESG listings of its American parent company.

  • Vanguard Ethically Conscious International Shares Index Fund and ETF (VESG)
  • Vanguard Ethically Conscious Global Aggregate Bond Index Fund (VEFI)

Both funds remove companies involved in alcohol, tobacco, porn, fossil fuels, gambling, weapons and nuclear power. Securities in both will by market weighted.

VESG will invest in over 1,600 companies from rich countries excluding Australia, while charging 18 basis points, the same as Vanguard’s Global Shares ETF (VGS).

VEFI will provide exposure to over 18,000 fixed income securities in rich and developing countries while charging 26 basis points.

Analysis – “ethically conscious”?

These new ETFs are called “ethically conscious” in their fund names, yet the moral logic is a bit tricky to follow. The funds avoid alcohol companies – because beers and wine are unethical. But Microsoft, which busts unions, and Amazon, which pays its contractors so little they depend on food stamps, make the ethical cut. Tobacco companies are removed as unethical, but big pharma, which gouges third world countries with unaffordable drug prices, is just fine.

The fixed-income side is also confusing. The debts of oil majors are excluded because fossil fuel reserves are bad. But investing in the debts of the US government – the world’s largest oil consuming entity by virtue of its military – is again just fine.

Contacted for comment, Vanguard Australia boss Evan Reedman said the ETFs “will never be able to meet this broad range of highly individual values, but the introduction of these funds offers… exclusions that reflect some of the most commonly valued ESG sector exclusions.”


Invesco rounds off low-cost smart beta offering

Invesco is rounding off is new low-cost smart beta listings with three funds targeting equities markets outside the US.

  • Invesco Strategic Developed ex-US ETF (ISDX)
  • Invesco Strategic Developed ex-US Small Company ETF (ISDM)
  • Invesco Strategic Emerging Markets ETF (ISEM)

The three funds will use the same quality and value-like metrics discussed in yesterday’s email when picking stocks.

Those interesting in learning more can visit Invesco’s website here.