Stockholm (NordSIP) – SPP Fonder has launched a “fossil-free Factor fund” following the explosion of interest in both Factor investment funds and fossil-free funds in recent years, the first of its kind.
“We are convinced that this is a winning concept,” said Åsa Wallenberg, CEO of SPP Fonder, of the new SPP Global Multifactor Plus open-end global equity factor fund. “Factor investing is attractive in and of itself. The fact that the fund is fossil-free in addition will make it even more sought out by our customers.”
The move by SPP Fonder comes in the wake of the latest IPCC report, which found that the fossil footprint has to be cut radically and immediately in order to meet the Paris agreement objectives.
“Savers can be part of the solution, instead of the problem, assuming increasingly important positions in determining what funds invest in while enhancing savings in good and affordable products,” Wallenberg added.
The factor fund may also be known as a smart-beta fund, where each factor is based on a well-formulated thesis about what characterises selection and how those factors will contribute to the fund. In this case, the factors are momentum, value, size and volatility.
Momentum, for example, is defined by shares outperforming average earnings that continue to do so. Low-value shares develop better than highly valued shares, low-value companies are invested in that on average have higher returns than higher-valued companies, and the volatility for lower-priced shares yields higher risk-adjusted returns than shares subject to strong fluctuation.
“One could say that the fund is an intermediary between and active and passive fund, where the active element depends on how the fund manager systematises the selection of companies. Meanwhile, the fund follows benchmarks in terms of industry sectors and geographical regions on the passive side,” Wallenberg explained.
“By systematising the selection and taking advantage of the company’s distinctive features, we have developed a model that works well over time and in different market environments. The fund is well priced, making it suitable for many different customer groups.”