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US Trust launches Carbon Reserve-Free Strategy


US Trust has launched a new component of its proprietary and customisable Socially Innovative Investing (S2I) strategy – The Carbon Reserve-Free Strategy (CRF), which offers investors who want to express their environmental values the opportunity to invest in a portfolio that excludes companies that own, extract, distribute and/or process carbon reserves, as well as first-order users including the utilities and energy sectors.

The CRF was developed in response to rising demand among investors seeking companies with superior environmental business initiatives. The objective is to provide clients a US equity allocation that delivers risk-adjusted returns comparable to its S&P 1500 benchmark with companies that are environmentally focused.
“We know investors care about the environment and increasingly want to express this through their investments,” says Jason Baron (pictured), head portfolio manager for social investments at US Trust. “With rising carbon emissions and climate change concerns, investors want to be able to do their part to support a low-carbon economy. Investing in companies that support the environment, sustainability and carbon divestment principles is one way to have a positive impact on the world for future generations while continuing to seek returns and adding eco-friendly investment options to client portfolios.”
The CRF is composed of securities identified as environmental stewards according to a multi-factor screen. It is derived from US Trust’s Environmental Stewardship and Sustainability (E2S) portfolio.
The Forum for Sustainable and Responsible Investment (US SIF) recently estimated assets held in impact investing strategies, including those based on environmental, social and governance (ESG) principles, increased by a factor of eight between 2012 and 2014, to USD5 trillion.
A new report released by Bank of America Merrill Lynch, “Impact Investing: The Performance Realities,” projects further growth for impact and ESG investments, as individual investors increasingly insist upon investment options that reflect their commitment to environmental and social issues.
“We are seeing dramatic growth in the use of strategies that advance positive societal values,” says Christopher Hyzy, chief investment officer for Bank of America’s Global Wealth and Investment Management (GWIM) division, which includes US Trust and Merrill Lynch Wealth Management. “As these investing strategies become more sophisticated, they no longer necessarily require a trade-off in performance, increasing their appeal to investors.”

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