Stockholm (NordSIP) – In today’s ultra-competitive global asset management landscape, starting a new firm requires ambition, courage and above all, the belief in a new, better way, to deliver superior risk-adjusted returns to investors. Recently launched, Chicago-based V-Square Quantitative Management checks the boxes, of course, but not only. The firm leverages the expertise of its founders in using a two-pronged service approach, complementing its novel and sustainability-focused quantitative asset management services with a much-needed ESG data interface.
After catching up with V-Square’s latest recruit, Erik Norland, during the summer, NordSIP had the opportunity of meeting with co-founder Mamadou-Abou Sarr on his recent visit to Stockholm to understand the journey that has taken the former Global Head of Product Development and Sustainable Investing at Northern Trust Asset Management to start his own firm. “I always knew that one day, I would find an opportunity to start a firm of my own,” Sarr tells us. “After over eighteen years in the asset management industry having built a significant track record within sustainable investing, I was ready. It was also a good timing for my co-founder, Habib Moudachirou whom I met when we both worked at HSBC Global Asset Management.”
For Sarr, passion and thought process are at the core of his vision: “Working at the intersection where finance and sustainability meet has always made sense to me. I’m driven by my desire to use the expertise and the skillset that I have developed in this field to present the market with a unique, specialised firm that can provide quality ESG investment solutions to investors,” he says.
“For many existing asset management firms, integrating ESG is an afterthought. It is like a green lego brick in the middle of a multicoloured wall. Together with Habib, we wanted to build a firm with only green legos. We wrote our CSR, ESG, stewardship and investment policies in parallel, so that they would hang together,” Sarr continues. “Having worked for large global firms, we both knew how difficult it can be to reshape established processes and cultures. With a new and nimble firm like V-Square, everything is possible and investors can find solutions tailor-made to their needs. That’s why we developed a data interface, ESGCentral™, that allows investors to consolidate their ESG data from their different providers, regardless of whether they also utilize our asset management capabilities. We want to ensure that investors are equipped to take more sustainable decisions above all.”
The idea behind V-Square’s ESGCentral™ is simple and in high demand. In the fast-changing ESG landscape, the lack of standardisation among data and rating providers is well known and represents a challenge for many. ESGCentral™ proposes to simply integrate a client’s different data sources to be able compare results, or to run combined filters and proprietary scorings, for example. “The market response we have received, especially in the Nordics, is very exciting,” comments Sarr. “There is clearly a need and we arrived just in time. With the new EU regulations in place, every asset manager and asset owner has to get their house in order and there is little time to develop, in-house, the data management tools that will allow to perform the type of consolidation we propose.”
With former Northern Trust Asset Management colleague Erik Norland driving business development from this side of the Atlantic, Sarr is excited about the potential of gathering both ESGCentral™ interest and assets under management in the Nordics and beyond. “We are planning to launch two additional strategies in pooled funds by the end of the year, and we already have serious commitments. We couldn’t dream of a stronger start,” he says.
Meanwhile, Sarr is cultivating strong ties with academia in North America. “Quantitative management is grounded in academia. For us, it is crucial to partner with the best research institutions to stay at the top, especially with the strong current innovation in sustainability. Right now, we are working with MIT for example. I was amazed by the climate data available there and partnering with them to be able to use that data has been a priority. We also hosted a hugely successful event around ‘net-zero’ with MIT in June,” Sarr exclaims.
“One could ask if the surge of new initiatives/pledges is not just a growing tree hiding in the forest. In other words, the announcement’s effect keeps the topic as a discussion item yet, without follow-through from all stakeholders, there is no meaningful progress toward a lower carbon economy,” writes Sarr in Low Carbon Pathway, a recent paper published by V-Square on the Climate Action platform, where he details the different solutions to a low carbon economy from policy action to market mechanisms. To illustrate his point, Sarr proposes the Greenhouse Gamble™ Wheels, originally developed by the MIT Joint Program on the Science and Policy of Global Change and available to explore on V-Square’s website. Each wheel represents a different set of greenhouse gas policies, and each slice shows the likelihood of temperature change in that range by 2100. An eye-opening exercise.
From academia, then, armed with quantifiable evidence, via data integrations and consolidation, through to a customisable quantitative management solution, V-Square is off to a strong start, and well positioned to become more than just another asset manager.