Ossiam, the affiliate of Natixis Investment Managers, has launched its US ESG Low Carbon Equity Factors Ucits ETF on the London Stock Exchange.
The fund uses a quantitative strategy to select small to large cap US equities based on environmental, social and governance characteristics and exposure to equity factors that are deemed to deliver alpha over the long term.
The ESG filters seeks the 80% best ESG rated stocks for each industrial subsector, while filtering to exclude weapons, tobacco and coal-derived businesses and those that fail on at least one of the Ten Principles of the UN Global Compact, or which are deemed subject to "severe controversy."
From the resulting list of companies, the stratetgy builds two portfolios, one based on stock factors, the other on sector factors, which are equally weighted. The stock factors include value, momentum, size and volatility, as well as carbon footprint. The sector factors include value and momentum, as well as seeking lower carbon footprints.
Bruno Poulin, CEO, Ossiam, said, "The launch of our latest ETF exploits the strength of evidence for equity factors as a means of achieving alpha over the long term. We believe that a static approach to factor investing is inefficient. Our dynamic approach recognises the existence of factors at both sector and stock level, which complement each other under different market conditions. On that basis, our exposure to multiple factors at both levels enhances diversification. Built on sound academic foundations and taking into account ESG principles, the strategy aims to deliver long-term outperformance with limited tracking error."
The London listed ETF trades in both sterling and dollars. It was listed last week on Deutsche Boerse.