Fund manager Vanguard has today launched a new international shares fund that excludes the tobacco, controversial weapons and nuclear weapons sectors.

The Vanguard International Shares Select Exclusions Index Fund tracks the MSCI World ex Australia ex Tobacco ex Controversial Weapons ex Nuclear Weapons Index, providing investors with exposure to more than 1500 listed companies across 20 developed international markets (excluding Australia).

Consistent with the existing Vanguard International Shares Index Fund, the third-party index provider for this new international shares product is MSCI, who have more than 40 years’ experience building research-based indexes.

Vanguard Australia Head of Market Strategy, Robin Bowerman, said the fund manager had worked closely with New Zealand clients to offer a solution that met their specific needs, noting that Booster Financial Services had provided the major seed investment for the fund.

“Vanguard has been consulting with Booster over the past four months as we developed this fund, and their initial investment supports the product’s launch in New Zealand, ultimately offering more choice to investors,” Mr Bowerman said.

“This fund includes the key features of all Vanguard funds, offering broad diversification at a low-cost, while also meeting our index construction best practice principles.”

Booster Chief Investment Officer and Joint CEO, David Beattie, confirmed that the company will be switching all of its current core international shares investments into the new fund on behalf of investors in its KiwiSaver, Superannuation and Investment products.

“Booster is very pleased to continue its long-standing relationship with Vanguard as the major initial investor in this newly created fund, by transferring around $400 million in assets,” said Mr Beattie.

“We have been working closely with Vanguard since August, and the outcome has achieved the desired balance between addressing investor concerns without compromising investor returns.”

The Vanguard International Shares Select Exclusions Index Fund is available to New Zealand and Australian investors.KiwiSaver provider Booster Financial Services is today moving its core international shares investments into the new Vanguard International Shares Select Exclusions Index Fund. The $400 million of assets transferred represents around 20% of the total of $2 billion that Booster manages on behalf of its investors.

The new Vanguard fund has been specifically designed to address the recent concerns expressed in relation to some indirect exposure to controversial companies included in the standard Vanguard International Shares Index Fund.

Booster welcomed the new fund and the peace of mind it would bring to most investors.  However, Booster Chief Investment Officer and Joint CEO, David Beattie, said it is important to clarify that the new fund should not be labelled as ‘ethical’ or ‘socially responsible’. Whilst it excludes investments in companies associated with controversial weapons, such as the manufacture of cluster bombs, landmines and nuclear weapons, it will continue to include investments in some of the categories which a true ‘ethical’ or ‘socially responsible’ investment fund would normally filter out.

For investors with stronger views on avoiding companies on a broader range of ‘ethical’ criteria, Booster continues to offer separate Socially Responsible Investment (SRI) options. “Our SRI funds will therefore not be switching into the new Vanguard fund. They will continue to invest in the current UBS fund which tracks the specific MSCI World Socially Responsible Index.”

Booster’s SRI funds have been certified by the Responsible Investment Association Australasia according to the strict operational and disclosure practices required under the Responsible Investment Certification Program. See www.responsibleinvestment.org for details.

Booster is the only major KiwiSaver provider to offer New Zealand managed socially responsible investment funds.