Schroders has launched the Sustainable Multi-Factor Equity (SMFE) fund, a global equity strategy that integrates environmental, social and governance (ESG) analysis into a systematic investment approach.
The cost-effective SMFE fund will aim to outperform the MSCI All Country World Index, while savers will also benefit from Schroders’ sophisticated approach to investing sustainably.
The fund will particularly appeal to UK Defined Contribution (DC) schemes, as it provides a distinctive solution that meets members’ growing demand to invest their pension savings more sustainably.
Tim Horne, Head of UK Institutional DC, Schroders, says: “DC pensions are increasingly looking at how best to incorporate sustainability into their schemes in response to investor demand and regulatory change. However, until now, this has been a challenge for DC schemes as the charge cap means many actively-managed strategies are out of reach for most schemes. Existing low-cost options also tend to offer a limited approach to sustainable investing.”
“We are confident that Schroders’ SMFE fund, a cost effective, systematic multi-factor solution which integrates ESG through its bottom-up investment approach, will appeal to trustees wishing to add sustainability into the default investment strategy.”
The SMFE fund is based on Schroders’ successful Global Multi-Factor Equity fund, which launched last year. Both strategies harness Schroders’ factor investment capabilities to provide exposure to proven return sources: quality, momentum, value and low volatility.
Additionally, the SMFE fund will feature an innovative approach to integrating sustainability into equity investing. At its core is Schroders’ new proprietary framework, SustainEx, which measures the positive and negative ESG impacts companies place on society and the environment.
To further meet clients’ expectations of sustainable portfolios, the SMFE fund will have less than half the carbon intensity of the index and exclude industries such as tobacco, weapons and gambling companies.
Jessica Ground, Global Head of Stewardship, Schroders, says: “The evidence is increasingly clear that savers want to invest more sustainably. Our SMFE fund aims to support investors on their retirement journey by delivering index-beating and sustainable returns thanks to the innovative SustainEx framework created by Schroders’ Sustainability team.”
The fund will incorporate ongoing research to ensure the ideas and data behind its investments are continually improved.
Ashley Lester, Head of Multi-Asset Research and Systematic Investments, Schroders, says: “SMFE combines a scientific approach to ESG measurement with an equally scientific approach to factor investing.”
“We aim to put the best thinking in both ESG and factor investing to work for our investors, both now and through a measured but continuous process of improvement in the future.”