One of the world’s largest asset managers Vanguard has once again used its long-term ally to launch the Vanguard Baillie Gifford Global Positive Impact Stock Fund.
The relationship between Vanguard and Baillie Gifford dates back to 2003, shortly after the ‘dotcom’ bubble burst. While Baillie Gifford has certainly enjoyed some admirable performance in the last decade or so, in 2003 it may have seemed an odd choice for a passives master such as Vanguard to select as the Scotland-based firm wasn't doing particularly well.
This recent partnership is expected to launch in the second quarter of this year and will at some point incorporate the existing Baillie Gifford Positive Change Equities Fund into the vehicle subject to shareholder approval. Vanguard expects to make the combined fund available for public investment in Q3.
Vanguard chairman and chief executive Tim Buckley said in a statement: "We'll continue to thoughtfully expand our ESG lineup, introducing funds and ETFs with enduring investment merit that reflect clients' needs and preferences.
"The new Global Positive Impact Stock Fund will tap Baillie Gifford's significant expertise in fundamental equity research and impact analysis, helping our clients to achieve both their impact and investment goals."
Andrew Telfer, Baillie Gifford joint senior partner, added: “"We hope that this fund adoption will broaden access to impact investing at a very competitive cost. As a result, it should help to channel more capital towards companies driving positive change."
Vanguard is in fact Baillie Gifford’s biggest client. The latter runs Vanguard’s active Global Equity fund although the US listed giant didn’t put all its eggs in the growth basket when assigning mandates.
Another firm that Vanguard uses for active strategies is the institutional client-focused Wellington Management, which has a value tilt. Oddly, both Baillie Gifford and Wellington run the aforementioned Vanguard Global Equity Fund, suggesting that it can adapt to market conditions well (although growth seems to have dominated since the fund’s inception).
To compete in this saturated ESG market, price is key and Vanguard is well-known for offering cheap products. It was the originator of the index tracker brought to market by the legendary founder of Vanguard John Bogle but in the active space products don’t tend to have management fees in single basis point territory.
Vanguard has said that the average management fee for these products is 1.49 percent and you can beat your bottom dollar that the US giant will undercut the market. BlackRock, the largest asset manager and in direct competition with Vanguard, should take note. As was Mr Bogle’s love of naval history (the firm’s name is taken from Lord Nelson's flagship in the Napoleonic war), it’s apt to say that this fund is one hell of an opening salvo in the war to bring successful passive and active strategies under one roof.
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