Index provider Stoxx and sustainability-focused asset manager Osmosis announced the launch of the iSTOXX Osmosis Multi Factor Transition Indices, a new suite of 48 indices integrating sustainability research into factor investing strategies.

According to the companies, the new indices are designed to offer investors access to a broad range of systematic equity exposures, while combining proprietary sustainability-integrated factor research from Osmosis with the breadth of STOXX Investable Market Indices. The suite includes single-factor, multi-factor and sustainability-integrated indices designed for institutional investors.

Stoxx and Osmosis highlighted the approach taken in developing the new indices, with sustainability considerations integrated directly into portfolio construction, rather than applied as an additional screen or overlay. The companies also said that the framework redefines traditional factor definitions to capture evolving sources of corporate value creation and risk, with Value, for example, incorporating R&D and intangible investment, Quality focusing on durable profitability and the quality of earnings, Momentum assessed through a risk-managed lens, and Low Volatility focusing on downside risk.

Axel Lomholt, General Manager at STOXX, said:

“We are delighted to collaborate with Osmosis to bring its proprietary factor and sustainability research into the iSTOXX framework. Together we have created a broad and flexible index family built on STOXX Investable Market Indices, that translates this research into a practical range of solutions for institutional investors.”

The framework was developed by Osmosis’ quantitative investment team, expanded last year under CIO Dr Fadi Zaher to deepen the firm’s expertise in factor investing and index design.

Zaher said:

“The foundations of factor investing were established decades ago. We believe the next generation needs to reflect how companies create value today, while recognising the growing financial importance of sustainability-related risks and opportunities.”