It was a bit late to the party, but Vanguard Global ESG Select Stock (VEIGX) is having a blast so far. The fund launched in 2019—well into the ESG investing trend, which places as much value on environmental, social and corporate governance criteria as on financial measures when selecting stocks. Over the past three years, managers Mark Mandel and Yolanda Courtines, of subadvisory firm Wellington Management, have delivered a 10.1% annualized return. That beat the fund’s bogey, the FTSE All-World index, as well as the typical global large-company stock fund with an ESG focus.
Mandel and Courtines pick profitable, well-run firms around the globe that are leaders in integrating ESG practices into their businesses. They focus on companies that have a market value of more than $20 billion and score well on stewardship, says Mandel. That means the firm’s board members are steering the company toward a future that rewards all stakeholders, including employees, shareholders and the planet.
Take farm equipment giant Deere (DE), one of the fund’s 37 holdings. Its See & Spray technology uses computer vision and machine learning to spray pesticides only on weeds in corn, soybean and cotton fields. This decreases the environmental impact of pesticides and increases a farmer’s crop yield at the same time. The company has a loyal band of employees, too, a vibe Mandel and Courtines picked up on during a recent tour of a Deere plant. And they say new board members with more tech expertise may help push the company forward.
Mandel and Courtines like to get involved with the companies they own shares in, though some are far flung. Half of the fund’s assets are invested in foreign stocks, including Hong Kong–based insurance behemoth AIA Group and Swiss health care company Novartis. Some companies resist engaging with the managers at first but come around eventually. For instance, Colgate-Palmolive (CL) executives, says Courtines, are now open to suggestions about which ESG metrics the firm should focus on. “We set a high bar and give companies the opportunity to be proactive” on setting ESG targets, she says. Otherwise, “we start to look elsewhere.”
Rivan joined Kiplinger on Leap Day 2016 as a reporter for Kiplinger's Personal Finance magazine. A Michigan native, she graduated from the University of Michigan in 2014 and from there freelanced as a local copy editor and proofreader, and served as a research assistant to a local Detroit journalist. Her work has been featured in the Ann Arbor Observer and Sage Business Researcher. She is currently assistant editor, personal finance at The Washington Post.
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