Management

Vanguard plans 3 new mutual funds, open to Personal Advisor Service investors only

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Instead of a plain-vanilla index, customers of direct indexing can add or delete certain holdings according to their beliefs or values, such as screening out companies that sell weapons or tobacco, that donate to certain political causes, or that fail to support environmental, social and governance issues.

“Direct indexing helps investors express their very different values,” Blank said. “Investors now are moving toward this concept.”

Currently, individuals rely on mutual funds and exchange-traded funds that offer a way to express their beliefs in the markets. The growth in ESG funds — environmental, social and governance oriented — is just one example.

This growing focus on high-profile, public interest issues, such as executive pay, has also led to a rise in campaigns launched against Corporate America from multiple activists.

A relative newcomer to the activist space is American Conservative Values ETF (NYSE: ACVF) which began trading in October 2020, and charges investors 0.75% annually. Most recently, the fund divested its holdings and initiated a boycott of Bank of America Corp., Lowe’s Co., American Express Co. and Nasdaq, Inc. as part of a periodic portfolio reconstitution based on its view of conservative political values.

Lowe’s, Bank of America, and American Express “have embraced and begun teaching their employees critical race theory,” said the portfolio manager Tom Carter, an educational philosophy that “insists that certain Americans will always be oppressors, while others can never rise above an oppressed status and will forever remain victims. Such ideas are antithetical to American values, and to those conservative investors who look to our fund for guidance.”

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