Sustainable Investing: Vanguard’s new ‘impact fund’ targets social and environmental change, not just financial performance

by | Jul 23, 2022 | Stock Market

Vanguard released its sixth environmental, social and governance fund Monday, joining with U.K. investing firm Baillie Gifford to launch an actively managed, global equity fund that invests in companies the managers believe will produce a positive social change. Vanguard Baillie Gifford Global Positive Impact Stock Fund will invest in companies the fund managers believe will generate financial returns as well as positive social and/or environmental impact. It will have the ticker VBPIX.

To launch the new Vanguard fund, adapted the existing Baillie Gifford Positive Change Equities Fund
which debuted in 2017. This will be Vanguard’s first dedicated impact fund – a type of the ESG investing — and only its second actively managed ESG fund. Whereas some ESG funds exclude certain types of industries such as traditional energy or weapons manufacturers, or select firms based on certain historical or current metrics, impact funds are supposed to show a clear sense of purpose and provide measurable impact. Some investors “want to try to do two things at once. They want to meet that preference to have an ESG-related product and also capture outperformance as well,” says Dan Reyes, head of portfolio review department at Vanguard.  Funds may measure impact through a number of ways, such as dissecting a company’s disclosures, external data and analyst assessments, and the funds release reports that detail particular impacts, such as carbon emissions prevented, energy efficiency or other metrics. OPINION: ‘Climate’ is the new buzzword in a crop of new ESG funds that were just launched Vanguard has worke …

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