Interactive Investor

Vanguard unveils sustainable active funds

8th December 2021 11:29

Jemma Jackson from interactive investor

Competition in the market just stepped up a gear, says interactive investor.

interactive investor, the UK’s second-largest DIY investment platform, welcomes today’s launch of the Vanguard SustainableLife range and Vanguard Global Sustainable Equity Fund, which will fill a genuine gap in Vanguard’s offering, being both sustainable and genuinely active.

Sustainable fund launches have exploded in number in recent times. Two years ago, there were just over 100 sustainably themed funds for investors to choose from, which has today grown to over 150 – and it is still growing. Being able to differentiate between genuinely sustainable funds, and find the one that most closely aligns with your values, remains crucial.

Dzmitry Lipski, Head of Funds Research, interactive investor, says: “Vanguard have been slow to embrace a sustainable investing range, so these launches fill an important gap in their offering and are very welcome. At first glance, the Vanguard SustainableLife range looks like a good ethical, active alternative to the hugely successful LifeStrategy range, and the similarities in the names are clearly deliberate. If that doesn’t shake up competition in the market, nothing will.

“But this new SustainableLife range is not the cheapest: the BMO Sustainable Map range, for example, has an ongoing charge of 0.35% on ii (versus 0.48% for the new Vanguard SustainableLife launch). That said, Vanguard do have a history of slashing costs as assets increase, and while ethical investing does not have to be a race to the bottom on costs, charges do matter.

“These new Vanguard sustainable funds will be powered by Wellington, bringing institutional quality management to retail investors. Competition for sustainable funds has just stepped up a gear, and this is great news for investors.

“With an increasing number of ethical funds to choose from, it is even more important to have confidence that these funds are being run along genuinely ethical lines. Heritage in the sector is important, and although we will be assessing these funds in more detail, Wellington is well known for integrating ESG considerations into its processes.”

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