US asset manager TCW has launched in Italy a thematic equity strategy investing in companies from Developed Market countries that take into account ESG principles.
TCW Funds - TCW Global Premier ESG Equities Fund seeks long-term capital appreciation by primarily investing in common stock of companies in Developed Market Countries that are attractively valued relative to their free cash flow.
While applying a proprietary ESG filter, the fund's investment strategy is based on two pillars,a quantitative one, related to a proprietary ESG scheme designed and developed by TCW, and the a qualitative one, based on the active choices of the manager utilizing deep research by TCW equity analysts.
According to the asset manager, this dual approach allows them to select truly ESG companies like those that are able to manage their environmental and social resources at best and to apply mindful corporate governance practices.
The portfolio is formed by 20 to 30 stocks and substantially different from the benchmark, so much so that the ‘active share' of the fund was 95, as of 30 of June 2019.
The fund's screening process uses a proprietary quantitative ESG scheme designed and developed by TCW which, starting from the data of more than 1000 listed companies, assigns to each of them a ‘Fundamental Score' and a ‘Disclosure Score' for each of the more than 35 ESG factors taken into account. The first score indicates how well a company is performing compared to its peers with regards to ESG factors, while the second score measures how much a company is committed to disclosing ESG information.
All companies that are above their sector's average in both rankings (Fundamental and Disclosure) become part the investment universe, which generally includes about 200 companies.
The Portfolio Manager of the Fund is Joseph Shaposhnik, who manages a similar investment strategy in the US, focusing mostly on the US equity universe.
Gian Luca Giurlani, managing director and head of Europe, TCW said: "After the Artificial Intelligence equity fund, TCW has decided to make a second equity fund available to European investors, believing that through highly active management today a portfolio manager can provide lasting added value to investors. The decision to promote an ESG fund, despite the high level of competition in this area, stems from our conviction regarding the value of our quanti-qualitative approach."