AXA Investment Managers (AXA IM) has launched the AXA World Funds Global SmartBeta Equity ESG fund.
The fund aims to deliver 1-2% annualised excess return with around 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.
Investments in companies with controversies and low ESG scores will be avoided while the fund exposure will increase to companies with high ESG scores using a ‘best in class’ approach.
The fund has institutional share classes and is registered for distribution in Austria, Denmark, Finland, France, Germany, Italy, Luxembourg, Netherlands, Norway, Sweden and the UK.
The firm plans to launch a retail share class later this year.
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.
“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.”
Matt Christensen, global head of Responsible Investing at AXA IM, added: “It is exciting to bring this strategy to the European market following significant success in Australia. 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. We know that investors and authorities in other markets are monitoring the implementation of these rules with interest as they could form a blueprint for developments across Europe and beyond.”
AXA IM had €666bn in assets under management as of end March 2016.