Global

Low Carbon/Low Volatility Global Equity

At a Glance

As climate change awareness continues to grow, many investors are increasingly looking to decarbonize their portfolio to align with their values. Designed to reduce exposure to transition risks from high-carbon-emitting companies, our Low Carbon/Low Volatility strategy seeks sustainable long-term, risk-adjusted returns with the potential for less volatility.

Active Factor Investing Designed for Better Risk-Adjusted Returns

  1. Market-like Returns: Potential for market-like returns with strong down-market outperformance.

  2. Risk Compensation: While many investors haven't been rewarded for up to a third of their equity market risk, we aim to only take on risk that is compensated.

  3. Low Cost: The quantitative nature of our strategy allows us to offer it at a lower cost than traditional active investment management.

  4. Invests in companies with a persistently high spread between ROIC and weighted average cost of capital (WACC).

  1. Consistency of Approach: We collaborate with independent equity research teams to develop a comprehensive perspective on risk and reward.

  2. Disciplined Risk Management: Our large risk management team is separated from investment functions which helps safeguard client assets.

  3. Client-centric Focus: The size of our operations creates efficiencies, and those benefits are incorporated into client objectives.

Philosophy and Approach

  • Investors are typically encouraged to compromise between seeking higher long-term returns and mitigating losses within equity markets. We seek to eliminate this compromise by providing long-term market-like returns with significantly lower risk.

    Investment Process:

    Our optimization process is driven by risk considerations. Our key inputs are risk forecasts, trading cost forecasts, and portfolio constraints. Our risk and trading cost models are regularly re-calibrated using recent data to help ensure that they produce contemporary estimates.

    Portfolio Construction Methodology

    We rebalance/calibrate the portfolio by overweighting equities that are expected to deliver lesser volatile returns and underweighting or excluding equities that are expected to deliver more volatile returns. The portfolio is monitored daily and will be rebalanced whenever significant reductions in risk are possible, or in response to significant cash flows or market activity.

  • Buy/Sell Discipline:

    We are disciplined and consistent in the implementation of our strategy. If a significant market event occurs that is not yet reflected in the model’s data, the portfolio manager has the flexibility to adjust the portfolio. This type of modification is designed to manage risk.

    Trading/Execution Strategy:

    The strategy will avoid executing trades that would result in insignificant reductions in expected volatility. The strategy strives to always remain fully invested, with cash positions kept to a minimum. Our independent trading desk executes all securities trades and focuses on seeking best execution.

    Risk Management:

    Risk management is integrated throughout the process with a focus on avoiding unintended risks through independent monitoring daily.

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