Today Vanguard have implemented a number of changes to the Vanguard SRI Global Stock fund, and we have retained our Responsible Recommended rating.
Firstly, the fund's name will change to Vanguard ESG Developed World All Cap Equity Index, as will its benchmark, to the FTSE Developed All Cap ex Controversies/Non-Renewable Energy/Vice Products/Weapons index (previously the FTSE Developed index). The fund will now be seeking to fully replicate the new index (previously an optimised approach), which in addition to the existing exclusions, will now also exclude any investment into stocks on issues with regards to Adult Entertainment, Alcohol, Gambling, Weapons and Non-renewable energy (including Fossil Fuels and Nuclear) and companies that breached the UN Global Compact principles. The fund's Ongoing Charge Figure (OCF) has also been reduced from 0.22% per annum to 0.20% per annum.
Overall Square Mile has a positive view on the changes, however, we would highlight that the fund will have a higher allocation to smaller companies which is likely to increase its volatility. Ultimately, the decision to fully replicate the new benchmark where possible is likely to lead to a lower tracking error and the additional exclusions should make the fund more appealing to a wider range of investors. Furthermore, we welcome the fee reduction.
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