AXA IM Sustainable Equity Strategy
What is factor investing?
Factor investing is an investment approach that aims to offer investors a cost effective and transparent way to improve risk and return by capturing specific equity characteristics such as quality, low volatility, value and momentum.
Why consider factor investing?
Factor investing can be efficient, cost effective and provides investors with diversified exposure to equity markets. Importantly, individual factors may offer different patterns of risk and return and, as such, investors can use factor investing to better target specific investment goals. Investors may choose to target just one factor or mix factors in a way that best matches their investment needs.
Our approach to factor investing
We have developed an advanced approach to factor investing that is anchored to company fundamentals. Our factors benefit from value-added proprietary data and incorporate controls which aim to reduce unnecessary investment risk.
We offer blended factor strategies designed to meet specific investment needs. The Sustainable Equity strategy aims to provide exposure to the Low Volatility and Quality factors and fully integrates ESG considerations. The result is a portfolio that seeks to provide superior, long-term equity returns but with lower total volatility than a standard market capitalization-weighted index. By design, we would expect this strategy to perform best during down markets while capturing equity returns in rising markets.
Why does sustainable investing matter?
Sustainable investing is a way of making investment decisions which aim to deliver financial returns and a benefit to society at the same time. It directs investment to companies that seek to promote corporate responsibility while seeking to fight against climate change and environmental destruction.
While Environmental, Social and Governance (ESG) investing is not a new concept, it contains economic information, which defines a company’s profile. Having measurable, reportable and trackable results of companies helps asset managers address these global challenges and define appropriate sustainable investing strategies. It offers investors seeking ESG orientation in their portfolios a transparent way to improve risk and return.
Role in a portfolio
Core element of a global equity allocation
Specific exposure to quality, low-volatility factors
Entry point to diversified ESG exposure
Diversifier across geographies and market cap
Expenses capped at 35bps
Focused on companies that deliver sustainable earnings, to create a defensive portfolio
ESG Integration to mitigate risks and potentially improve long term returns
For investors aiming for more sustainable outcomes through ESG integration
What are the risks associated with this strategy
Company specific risk: There may be instances where a company will fall in price (or rise in price) because of company specific factors (for example, where a company’s major product is subject to a product recall).
Highly volatile markets: The prices of financial instruments in which the strategy may be invested can be highly volatile.
Market risk: Changes in legal and economic policy, political events, technology failure, economic cycles, investor sentiment and social climate can all directly or indirectly create an environment that may influence (negatively or positively) the value of your investment in the strategy. In addition, a downward move in the general level of the financial markets can have a negative influence on the strategy.
Please note all investments carry risks. Including but not limited to systematic investing risk, emerging markets risks, investment selection risk, currency management risk, fund risk, parent company discretion risk, depositary receipts risk, liquidity risk, operations risk, legal risk and borrowing risk. For additional information, please read the Product Disclosure Statement.
Carbon reduction: Moving away from carbon footprint towards carbon footpath
As concerns surrounding climate change continue to intensify, equity investors increasingly need to understand how this could impact their investment portfolios. In addition to obvious financial conc ...
10 ESG integration questions you didn't know you needed answered
A look at growing interest in environmental, social and governance (ESG) issues, Rosenberg’s approach to these ideas, and the influence they are having on the investment landscape.
Blazing a trail: ESG integration and big data
Incorporating ESG criteria across AXA IM Rosenberg’s strategies and how innovative use of data can help improve investment outcomes.
Fundamental Factors: An introduction to factor investing
Part one of a three part primer series.
Fundamental Factors: Around the world in four factors
Part two of a three part primer series.
Fundamental Factors: Machine learning in factor investing
Part three of a three part primer series
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