Robeco launches emerging markets ESG fund

The fund is targeting companies scoring at least 20% higher on certain ESG criteria, compared to the benchmark index

Dutch asset manager Robeco has launched an emerging markets sustainable enhanced index fund which aims to invest in companies with a positive environmental profile.

The Robeco QI Emerging Markets Sustainable Enhanced Index Equities fund is targeting companies that score at least 20% higher on set ESG criteria compared to the benchmark MSCI Emerging Markets Index.

The Netherlands-based group, which manages some €186bn in assets, said the fund will invest in companies which score better on key metrics such as greenhouse gas emissions, water use, waste generation and energy consumption, compared to the benchmark.

“The fund is an alternative to passive investing, and an interesting solution for investors looking for stable outperformance after costs, with a low tracking error,” Wilma de Groot, head of core quant equities at Robeco said.

“Our enhanced indexing strategies have a similar absolute risk profile as passive strategies, but can generate better returns by actively integrating sustainability criteria as well as incorporating 50 years of factor investing research,” de Groot added.

The fund ranks stocks according to sustainability criteria and expected future relative performance using several known investment factors including Valuation, Quality, and Momentum.

Robeco hopes that this will result in a well-diversified portfolio with a low tracking error relative to the index.

The newly launched fund will be managed by the fund group’s core quant equities team, which is already responsible for several enhanced indexing strategies. These span several geographies including European, US and emerging markets equities. It will be run with a values-based exclusion list with associated voting and engagement policies .