Vanguard launches two ESG ETFs
Vanguard has launched two new ESG ETFs in Europe that give access to the share markets of two continents.
- Vanguard ESG Developed Europe All Cap UCITS ETF (V3EA)
- Vanguard ESG North America All Cap UCITS ETF (V3NA)
The funds are listed on major European exchanges.
V3EA is an ESG-screened version of VEUR. It tracks the FTSE Developed Europe All Cap Choice Index. It’s a broad-based market weighted index that includes rich European countries, including the UK and Switzerland.
V3NA is an ESG screen version of VNRT. It tracks the FTSE North America All Cap Choice index is made up of 1600 companies in Canada and the US.
The ESG screen both funds use is the same. It’s negative, and excludes companies in fossil fuels, nuclear power, porn, weapons, and sever controversies.
The funds charge 0.12%.
Bernie’s commentary – everything’s an AK-47
There was an old joke about the Soviet Union that no matter what you put in, an AK-47 is what comes out. It was funny because it didn’t just poke fun at the USSR’s economy – where the Red Army took almost 20% of GDP. But it also poked fun at the ideology of the USSR – where it was guns before butter.
I always thought you could make a similar joke about product building at Vanguard. No matter you put into Vanguard’s product machine, a beta product comes out. All their ETFs hug some market-weighted total market benchmark. There's a sense in which they're all the same.
I’m not trying to be too judgemental. Vanguard’s cheap beta products are fantastic—I use them myself. But if you’ve spent any time on Vanguard’s “campus” (headquarters), you understand that there’s more than a touch of ideology at play too. From my own time there, I found Vanguard people very smart, approachable, and even kind. However I was struck by the ideology too. (There's a statue of Jack Bogle, they all call each other "the crew").
As for these products, the ESG screen is modest. Vanguard has used a very similar ESG screen in other markets like the US, Canada and Australia. I see them more as modifications of existing products rather than building new ones.