The fund aims to deliver 1-2% annualised excess return with approximately 80% of market volatility over a full cycle; as well as achieving a higher environmental, social and governance (ESG) score and a lower carbon footprint.
With a retail share class expected later this year, the fund currently has institutional share classes and is registered for distribution in Austria, Denmark, Finland, France, Germany, Italy, Luxembourg, Netherlands, Norway, Sweden and the UK.
Avoid controversies
Axa IM’s ESG framework is systematically incorporated into the portfolio construction process using both negative and positive screening by avoiding companies with controversies and low ESG scores while increasing exposure to companies with high ESG scores using a ‘best in class’ approach.
Jonathan White, Axa IM SmartBeta client portfolio manager, said: “We believe that our SmartBeta strategy should be a long term holding for clients, however, given the current high levels of political uncertainty and increased volatility following the Brexit vote, we believe that the lower risk features could be especially attractive at this time.
“This is a trend which is not going away and we firmly believe that we will see the gradual progression of responsible investment from a specialist area to a ‘must have’.”
“Our SmartBeta strategy is designed to deliver a more advanced low volatility approach, taking into account earnings volatility as well as price volatility. Importantly, this allows investors to benefit from a lower risk profile in ‘down’ markets, as well as capturing returns in rising markets.”
ESG here to stay
Matt Christensen, global head of responsible investing at Axa IM, added: “Not only is the incorporation of ESG criteria consistent with clients’ fiduciary duty, but we believe the strategy is attractive in terms of diversification, risk monitoring and cost considerations.
“Investors globally are focussing more and more attention on how to manage their ESG risks. In France, for example, this increased focus has been driven in part by regulation in the form of the ‘Loi sur la transition energetique’ which requires large investors to measure and report and act on their investment policy to reduce ESG risks including their carbon footprint.
“This is a trend which is not going away and we firmly believe that we will see the gradual progression of responsible investment from a specialist area to a ‘must have’,” Christensen said.
