AXA Investment Managers (AXA IM) announced the launch of the AXA World Funds Global SmartBeta Equity ESG fund (the Fund) designed to provide a transparent, low cost way to invest responsibly whilst generating long-term returns and reducing risk.
The Fund aims to deliver 1-2 per cent annualised excess return with approximately 80 per cent of market volatility over a full cycle as well as achieving a higher environmental, social and governance (ESG) score and a lower carbon footprint.(1)
AXA IM’s ESG framework is systematically incorporated into the portfolio construction process using both negative and positive screening by avoiding companies with controversies and low ESG scores while increasing exposure to companies with high ESG scores using a ‘best in class’ approach.
Jonathan White, AXA IM SmartBeta Client Portfolio Manager, said:
“We believe that our SmartBeta strategy should be a long term holding for clients, however, given the current high levels of political uncertainty and increased volatility following the Brexit vote, we believe that the lower risk features could be especially attractive at this time.Our SmartBeta strategy is designed to deliver a more advanced low volatility approach, taking into account earnings volatility as well as price volatility. Importantly, this allows investors to benefit from a lower risk profile in ‘down’ markets, as well as capturing returns in rising markets.”
“We are confident that a better ESG outcome does not detract from the core risk and return objectives of our SmartBeta strategies given the breadth of our security coverage and the generally low historical correlation between ESG concepts and traditional financial statement information. Looking ahead we would expect the importance of ESG to increase and as such we believe the Fund is well positioned to adapt to the future and capture the benefits of avoiding ESG risk and capturing ESG opportunity.(2)”
Matt Christensen, Global Head of Responsible Investing at AXA IM, added:
“It is exciting to bring this strategy to the European market following significant success in Australia.(3) Not only is the incorporation of ESG criteria consistent with clients’ fiduciary duty, but we believe the strategy is attractive in terms of diversification, risk monitoring and cost considerations.
“Investors globally are focussing more and more attention on how to manage their ESG risks. In France, for example, this increased focus has been driven in part by regulation in the form of the ‘Loi sur la transition energetique’ which requires large investors to measure and report and act on their investment policy to reduce ESG risks including their carbon footprint.(4) We know that investors and authorities in other markets are monitoring the implementation of these rules with interest as they could form a blueprint for developments across Europe and beyond.
“This is a trend which is not going away and we firmly believe that we will see the gradual progression of Responsible Investment from a specialist area to a ‘must have’. As such this fund is well positioned to help clients to better consider ESG risks and opportunities.”
The Fund has institutional share classes and is registered for distribution in Austria, Denmark, Finland, France, Germany, Italy, Luxembourg, Netherlands, Norway, Sweden and the UK. A retail share class is expected to be launched later in the year.
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