Vanguard and Goldman Sachs Asset Management are coming out with fixed-income exchange-traded funds with distinctive strategies, the companies announced today.

Vanguard said it filed a preliminary registration statement with the Securities and Exchange Commission to launch the Vanguard ESG U.S. Corporate Bond ETF.

That product, which the company expects to launch in September, tracks the Bloomberg Barclays MSCI US Corporate SRI Select Index. The index methodology uses the Bloomberg Barclays U.S. Corporate Index as a baseline, and from there Bloomberg and MSCI apply exclusion screens to weed out the bonds of companies whose activities don’t meet certain ESG criteria.

Specifically, the index avoids companies involved in and/or deriving threshold amounts of revenue from activities or business segments related to adult entertainment; alcohol; gambling; tobacco; nuclear weapons; controversial weapons; conventional weapons; civilian firearms; nuclear power; genetically modified organisms; or thermal coal, oil or gas.

The index also excludes the bonds of companies that don’t meet certain standards defined by the index provider’s ESG controversies assessment, including the United Nations Global Compact Principles. And it avoids companies that don’t have at least one woman on their board or don’t report board diversity.

The fund will have an estimated expense ratio of 0.12%.

Goldman Sachs
Goldman Sachs Asset Management, the asset management arm of Goldman Sachs Group Inc., said its Goldman Sachs Access Investment Grade Corporate 1-5 Year Bond ETF (GSIG) began trading today.

The fund offers smart beta exposure to one- to five-year investment-grade corporate bonds, and it tracks the FTSE Goldman Sachs US Investment-Grade Corporate Bond 1-5 Years Index, which is owned and calculated by FTSE Fixed Income LLC and uses concepts developed with GSAM.

According to the prospectus, index constituents must meet certain liquidity and fundamental screening criteria, and they are divided into three broad industry groups: financials, industrials and utilities. Within each industry group, issuers are measured by two fundamental factors—operating margin and leverage, subject to certain exceptions.

From there, the index includes the highest-ranked eligible securities in each industry group, and an issuer weight cap is applied to each index constituent.

The fund’s expense ratio is 0.14%.