Vanguard Fund Pays Price for Sinful Lapse

A statue of John C. Bogle, the founder of Vanguard, stands on The Vanguard Group campus in Malvern, Pa.


Photo:

RYAN COLLERD for The Wall Street Journal


Once upon a time the greatest sin when managing other people’s money was lagging the market. Recently, though, asset managers have catered to investors’ desire to eschew companies they consider sinful, or at least objectionable. Environmental, social and governance funds are big business, even when they cost more or earn a bit less.

But fund giant Vanguard recently sent a notice to clients that its ESG U.S. Stock ETF held, among other objectionable companies, shares of oil-service company Halliburton and gun maker

Sturm Ruger


RGR 0.44%

for several weeks, according to ThinkAdvisor. Owners probably would have been miffed no matter the outcome, but those two also lagged the S&P 500 by 9.4% and 14.2%, respectively, over that period.

Virtue may be its own reward, but there are occasional pecuniary benefits too.

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