Tuesday, 3 September 2019

Vanguard Lifestrategy - Portfolio Sale


The Vanguard Lifestrategy funds have been a cornerstone of my globally diverse passive portfolio for several years. They had been on my watchlist for a couple of years prior to my first purchase of the VLS60 in May 2015.

Since I started to move my portfolio towards more climate-friendly funds last year, I was concerned about the over exposure of the funds to the oil & gas sector due to its 25% equity allocation to the FTSE All Share index. For the past 10 months, I have been in regular contact with Vanguard Investors urging them to provide some low carbon sustainable funds as an alternative for investors who wish to avoid oil stocks. Despite many assurances that they are working towards such offerings, so far nothing has materialised.

I recently learn from @ShareAction (Twitter) that Vanguard's executives in the US have been voting to prevent the directors of big oil companies such as Exxon, Dominion and Duke from facing accountability on climate. This is a big red line for me.

I therefore no longer wish to be associated with a company that protects the likes of Exxon from climate scrutiny and have decided to dispose of my Lifestrategy 40 fund and will close my Vanguard Investor ISA. I have emailed Vanguard UK to inform the management of the reasons for leaving and I hope they will pass this on to the senior executives in the US.

The funds - VLS60 and 40 - have provided a steady return over the past four years - combined is just over 40% in total, so no complaints on that score. I realise my actions will be a mere drop in the ocean but I hope Sean Hagerty and the senior executives in the US will start to take our climate emergency seriously when investors begin to withdraw their investments and assets under management start to fall.

As ever, this article is merely a record of my personal investment decision to sell and should not be regarded as a recommendation - always DYOR!

6 comments:

  1. Bold move but in accordance with your values.

    I don't intend to make any changes to my own portfolio just yet, haven't got the time to research where I would park my investments if not with Vanguard.

    Something for the future to consider.

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    1. Yes weenie, I always try to remind readers that this blog is just a record of my personal investment decision and of course others will have their own agenda, timeframe, values etc. so will make their independent decisions.

      I too have to mull over where to reinvest the proceeds but leaving it in cash at the present time should not be a problem. Schroder's ISF Global Climate fund is a possibility but it doesn't seem to be available with my current brokers.

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  2. Hats off to you. Always refreshing to hear someone sticking to ethical principles when it comes to investing.

    I too have been urging Vanguard to set up a genuine 'climate' tracker fund over the last few months but without success. Their 'brush off' is polished and well rehearsed. And ultimately wholly unconvincing!

    I'm therefore considering withdrawing my ISA investments from their platform. I hold VWRL and their global bond tracker. My only hesitation is finding a suitably cheap alternative. My overall pf contains a fair amount of 'green' funds on the HL platform but the reason i went to Vanguard was to keep the remaining costs right down.

    Suggestions welcome!

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    1. Thanks bernie. I'm sure if Vanguard UK really wanted to offer a climate-friendly option, they could easily have done so by now.

      I am also on the look out for an alternative low cost tracker but I think the industry is not fully up to speed on the climate issues and maybe not yet confident the demand is there from the retail investors. However, the landscape is changing rapidly so I think we should not have to wait too much longer.

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  3. Vanguard does seem to be behind iShares that seems to be launching a number of ETFs based on MSCI ESG indices. Not all available on the usual UK platforms yet.

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    1. That may well be the case but the fact remains - according to the analysis in this report - that both Vanguard and BlackRock continue to be the driving force behind the continuing climate crisis by protecting these major oil multinationals from facing scrutiny and accountability.

      Until that changes in a fundamental way, regardless of their ESG offerings, I will look elsewhere for my investments.

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