Vanguard Australia Launches ESG-Related Investment Products

  • FTSE Russell launches new FTSE Global Choice Index Series
  • Indexes help investors align their values with investments using ‘building block’ approach to allow for creation of customised solutions
  • Clear and simple exclusion methodology screens stocks according to social and environmental impacts
  • FTSE Developed ex Australia ex Non-Renewable Energy/Vice Products/Weapons Index selected by Vanguard Australia
    Tracked by the Vanguard Ethically Conscious International Shares Index Fund and ETF
  • c.$650 billion ETF AuM linked to all FTSE Russell indexes globally

FTSE Russell, the global index provider, is delighted to announce that Vanguard Australia has licenced a new values-aligned index for two ESG-related investment products. The FTSE Developed ex Australia ex Non-Renewable Energy/Vice Products/Weapons Index forms part of the new FTSE Global Choice Index Series. It is the first FTSE Russell standard index family to incorporate several categories of ESG-related exclusions in its design. Increasingly, investors are looking to exclude stocks from their portfolios based on the impact of companies’ products and conduct on society and the environment. In addition to the standard index family, clients can construct bespoke ‘Choice’ indexes using an innovative ‘building blocks’ approach, to customise alignment with their particular values and investment objectives.

The FTSE Developed ex Australia ex Non-Renewable Energy/Vice Products/Weapons Index has been chosen by Vanguard Investments Australia for its new Vanguard Ethically Conscious International Shares Index Fund, and for its Vanguard Ethically Conscious International Shares Index Fund ETF (ticker: VESG). These new funds are expected to list on the Australia Securities Exchange in September 2018. The index fund and Exchange Traded Fund (ETF) are part of a new range of ESG-focused equity and bond products being issued in Australia and the US by the firm. Vanguard Australia is the largest provider of ETFs by AuM in Australia and has 24 ETFs with A$11.5 billion in funds under management, as of 31 July 2018.

The index methodology screens stocks in nine product involvement categories. The transparent, rules-based construction reflects the performance of eligible securities from the FTSE Developed ex Australia Index, excluding companies based on their business lines and product involvement in fossil fuels, nuclear power, adult entertainment, alcohol, gambling, tobacco, and weapons.

Evan Ong, Managing Director, Asia ETP and listed derivatives strategy and business development, FTSE Russell, said:
“We are delighted that Vanguard Australia has selected our index for its latest ESG index fund and ETF. This new values-based index forms part of the FTSE Global Choice Index Series and helps meet the growing demand for integrating ESG preferences into investments. ESG-focused indexes constructed using our innovative ‘building block’ approach allow clients to align their values with their portfolios. We expect to see further iterations of new indexes being developed within the Index Series.”

Evan Reedman, Head of Product and Marketing, Vanguard Australia said:
“The adoption of ESG investing has accelerated in recent years, and more investors are looking for opportunities to align their investment choices with their values. Our new index fund and ETF marries Vanguard’s characteristic low-cost, diversified investment approach with a rigorous ESG screening process.”

The FTSE Developed ex Australia ex Non-Renewable Energy/Vice Products/Weapons Index is part of FTSE Russell’s extensive sustainable investment index and data offering which includes the Smart Sustainability indexes, FTSE4Good indexes, Green Revenues data model and ESG Ratings. London Stock Exchange Group is a pioneer in supporting the growing global green and sustainable financing movement, providing a comprehensive green and sustainable product offering.

Source: FTSE Russell

Related articles

  1. Investors are seeking the tax efficiency, trading flexibility and cost benefits of ETFs.

  2. Low Bond Yields Force Pensions’ Hand

    US Department of Labor has allowed pension plan fiduciaries to consider ESG factors.

  3. Goldman Sachs Asset Management agreed to pay a $4m penalty.

  4. FINRA membership marks further momentum in WisdomTree Securities' digital strategy.

  5. The prior administration’s restrictions on retirement plans and ESG were removed.