Natixis Investment Managers’ affiliate Ossiam is launching a smart beta ESG exchange traded fund, which uses machine learning to rank large cap companies on their ESG credentials.
The Ossiam World ESG Machine Learning UCITS ETF aims to deliver returns from equities in global developed markets, refining its chosen selection of stocks by their financial potential and sustainability characteristics.
“A clear trend has emerged of large equity investors putting ESG at the core of their allocation decisions,” explained Antonio Celeste, head of ESG Business Development at Ossiam.
“Progress in artificial intelligence, and the increased depth and quality of data, has enabled us to improve investment processes by incorporating the valuable information embedded in large amounts of ESG data.”
Ossiam will use assessments from ESG data providers to judge whether companies have been involved in major controversies, or have significant operations in the tobacco or coal industries.
The process will screen for any involvement in armaments, for noncompliance with the principles of the UN Global Compact, and will look for any company that has been excluded by the Norges Bank Investment Management list.
“It has always been Ossiam’s mission to drive the investment industry forward,” claimed chief executive officer Bruno Poulin in a media statement.
“This strategy and ETF mark a key turning point in combining ESG principles with advanced investment techniques as we reach a tipping point for ESG, driven by policy makers, regulators and investors.”
The fund is to launch in January 2019 and will be available in US dollar and euro share classes. It will be listed on the Deutsche Borse Xetra exchange. The total expense ratio will be 0.65 per cent.