The U.S. Small-Cap ESG Strategy is an ESG-focused small-cap core investment with low tracking error and high active share.

Investment approach

  • Applied research that goes beyond negative screening. Because we seek to holistically understand each investment's fundamental profile, we evaluate every company's environmental, social, and governance (ESG) attributes at a level deeper than negative screening. A dedicated research analyst subjects every name in our investment pipeline to multiple ESG analyses. Through this, we attempt to mitigate risk and assemble a portfolio that does not own controversial businesses.
  • Our process. From the universe of securities covered by our global equity research team and owned by our other investment strategies, we apply a multi-stage ESG process and apply screens designed to deliver a portfolio of our highest conviction securities with favorable ESG profiles. Seeking to isolate factor and idiosyncratic risks, as well as achieve high active share and low tracking error, we build a portfolio of typically 70-90 securities. In managing this portfolio, we strive for low turnover, to minimize unintended risk and maintain diversification in the portfolio.

Core Attributes: Active stock research. Enhanced screening. Low tracking error. High active share. Cost-effective.

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