Financial advisory service provider Envestnet announced today the launch of the Impact Global Climate Solutions QP (Quantitative Portfolio), designed to offer a passively managed, global equity portfolio enabling investors to allocate assets toward companies developing solutions for mitigating pollution and climate change.
Brandon Thomas, Co-Founder and Chief Investment Officer of Envestnet, said:
“There are many sophisticated climate-aware strategies, but they are actively managed, and the climate indices underpinning them are often static, exclusion-focused, and have high potential for tracking error compared to the parent index. Our Impact Global Climate Solutions QP fills a major gap in the marketplace for a passively managed, cost-effective strategy which is focused on supporting companies engaged in solving climate-related issues.”
According to Envestnet, the new portfolio QP consists of approximately 200 domestic large-cap and international developed market companies selected from its benchmark, which is made up of a blend of CRSP US Large Cap Index (69%) and S&P/BNY Mellon DM ex US Classic ADR Index (31%). Companies are evaluated by the firm’s Quantitative Research Group using environmental ratings, revenue information, and carbon risk data from Sustainalytics. The portfolio also employs exclusions to screen out companies deriving revenue from the fossil fuel industry, or those that have been involved in environmental controversies.
The portfolio also offers exposure to companies providing solutions to climate related issues, with increased allocations vs benchmark to renewable energy production and transmission companies, companies producing or enhancing energy efficient technologies and practices, green transportation and green building construction companies, and sustainable agriculture companies.
Envestnet stated that its QRG team optimizes the portfolio using a proprietary multi-factor risk model, while ensuring its environmental and carbon footprint metrics are better than those of the benchmark.
Brett Wayman, Vice President of Impact Investing at Envestnet, said:
“At a time of unprecedented public concern around climate change, we are providing investment solutions which help investors maximize the impact they can have. The impact investing strategies we have developed give investors the power to allocate their dollars toward creating a greener, more energy efficient economy.”