Index-based Investing

Index or passive investment strategies aim to track a chosen benchmark in an efficient, cost effective way by applying a systematic investment process.

Our index-based sustainable equity strategies seek to construct optimal portfolios which track the MSCI World index of developed market stocks but in a responsible way by excluding companies we consider to be unsustainable and investing more in more sustainable companies.

We launched our first sustainable index-based fund in 2006 and had EUR 16.2bn / GBP 14.5bn invested in sustainable index-tracking strategies at the end of 2018.

The ESG Plus Strategy

The Global ESG Plus strategy aims to create a broadly diversified, low tracking error fund which is pre-positioned for the implementation of the Paris Agreement. This is achieved using a multi-pronged approach. First, fossil fuel companies – defined as those whose revenues from fossil-related activities exceed 5% of total revenue – are excluded. Furthermore, the fund takes steps to ensure it is consistent with a fossil-free philosophy, which includes removing companies with large fossil reserves.

Next, via the Storebrand Standard exclusion policy, companies involved in alcohol, gambling, weapons or pornography are also removed from the investment universe. Investments are then tilted towards high ESG and low carbon footprint scoring companies. Finally, 5-10% of the portfolio is invested in solution stocks from a positive ‘white-list’ of around 130 companies which provide products and services that facilitate the transition to a low carbon economy (e.g. renewables, energy efficiency, low emissions transport and recycling). 

The portfolio is constructed using the MSCI Barra risk model to minimise tracking error and particular care is taken to ensure cost-effective trading and rebalancing. The strategy results in a broadly diversified, highly liquid and climate-aware portfolio with low tracking error.

More information about the Storebrand Global ESG Plus LUX

More on our award winning strategies

Factor Investing
Sustainable Solutions Portfolios