Schroders has launched a multi-factor equity fund which integrates sustainable investment metrics into a systematic investment approach.
The Schroders Sustainable Multi-Factor Equity Fund will aim to outperform the MSCI All Country World Index and is styled as a version of the company’s standard Global Multi-Factor Equity fund, which launched last year.
Both of these systematic strategies aim to generate returns based on the factors of quality, momentum, value and low volatility. The fund will have less than half the carbon intensity of the index, according to Schroders and it excludes investments in the tobacco, weapons and gambling industries.
Jessica Ground, global head of Stewardship at Schroders, said that the company was responding to the growing demand for sustainable investment ideas.
“The evidence is increasingly clear that savers want to invest more sustainably,” she wrote in a statement outlining the launch.
“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.”
SustainEx is Schroders’ new proprietary system which measures the positive and negative ESG metrics on how companies impact society and the environment.
Tim Horne, head of UK Institutional (DC) at Schroders, said defined contribution pensions are increasingly looking at how best to incorporate sustainability into their schemes in response to investor demand and regulatory change.
He added: “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.”