Deutsche Bank and Arabesque launch ESG investment products

Added 20th June 2016

Deutsche Bank and Arabesque Partners are to launch of a new family of investment products that apply a quantitative stock selection mechanism to environmental, social and governance (ESG) investing.

Deutsche Bank and Arabesque launch ESG investment products

The products will track the returns of the Arabesque Prime and Systematic indices, which are designed and operated by Arabesque.

They will be available to both retail and institutional investors around the globe. 

Data screening

Arabesque’s investment technology processes over 100 billion data points to select an investment universe of global stocks that deliver superior returns, integrating ESG data with quantitative investment strategies.

The firm screens thousands of stocks to identify around 1,000 companies that comply with its corporate responsibility guidelines and demonstrate strong ESG performance.

It then applies a range of other non-ESG filters to these companies to identify which companies score highly on other criteria such as financial stability, earnings momentum and market sentiment.

Not sacrificing returns

Sean Flanagan, head of equities & hybrids structuring Europe at Deutsche Bank, said: “The aim of the partnership is to allow investors to invest in a sustainable way without having to sacrifice return performance. There is a widespread assumption that sustainability comes at a cost, which is a reduced rate of return. But Arabesque’s combination of environmental, social, and governance selection criteria and performance has challenged that assumption.

“Deutsche Bank has seen a strong increase in demand for ESG based products over recent years. We see the cooperation with Arabesque as a crucial step to develop our ESG-footprint and continue building our ESG platform. The topic will keep growing in relevance and Deutsche Bank wants to play an active role in this development.”

Non-financial information integration

Omar Selim, chief executive at Arabesque Partners, said: “The integration of non-financial information into the investment process is fast becoming a global trend and today, people care more than ever before about precisely how financial return is generated. This trend is gathering momentum: 5,336 companies published a sustainability report in 2014, up from 294 in 2004. Investors can now clearly see that ESG and financial performance go hand in hand.”

Andreas Feiner, head of ESG research and advisory at Arabesque added: “ESG-based investing is one of the most significant trends in financial markets for decades. Over time, it will not be a question of whether investors will integrate ESG information in their portfolio selection but moreover when, how and with whom.”

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About Author

Kirsten Hastings

Senior Reporter

Kirsten is a senior reporter for International Adviser, covering global news stories about the financial services industry. She joined Last Word Media in October 2015 after two years working as a reporter covering the staffing and recruitment industry. Kirsten has a Masters in Financial Journalism from the University of Stirling. 

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