V-SQUARE launches MSCI Global Equity ESG Materiality Carbon Transition Indexed Strategy

Chicago based V-Square Quantitative Management LLC (V-Square), a global asset management firm with sustainability at its core, announced that it has expanded its market-leading separately managed account platform with the launch of the V-Square MSCI Global Equity ESG Materiality and Carbon Transition Indexed Strategy.

V-Square’s strategy tracks the MSCI All Country World Index (ACWI) ex-Australia ESG Materiality and Carbon Transition Select Special Tax Index and is designed to consider financially material ESG issues and promote companies participating in opportunities associated with the low carbon transition while using the withholding tax rates applicable to Australian superannuation funds. V-Square’s indexed strategy seeks to align with the current Your Future, Your Super International Equity indexes.

The underlying MSCI custom index represents the performance of companies which are assessed to be sector leaders based on a set of relevant key issues scores that are aligned with the Sustainability Accounting Standards Board (SASB) Materiality Framework. Additionally, the index seeks to minimize exposure to companies with carbon transition risk and increase exposure to companies participating in opportunities related to the carbon transition.

The MSCI ACWI ex-Australia ESG Materiality and Carbon Transition Select Special Tax Index reflects a universe consisting of large and mid-capitalization companies across 23 developed countries excluding Australia and 24 emerging countries. The daily net return of the index is calculated using the withholding tax rates applicable to Australian superannuation funds.

V-Square’s indexed strategy is currently offered with an unconstrained tracking error and V-Square plans to develop a second version to target a lower tracking error.

“We are thrilled to expand our investment solutions to the Australian market with an innovative strategy, focusing on the financial impacts of sustainability and accounting for current and potential exposure to climate change transition risks and opportunities,” said Mamadou-Abou Sarr, Co-Founder and President of V-Square.

The investment framework is reinforced by V-Square’s custom proxy voting policy guided by the core tenets of accountability, stewardship, transparency, and sustainability. By focusing on these areas of responsible governance, V-Square seeks to promote long-term shareholder value creation and risk mitigation at portfolio companies.

A solution for Australian Superannuation funds

Glen Gee, Head of ANZ Asset Owner Client Coverage, MSCI, said, “We are pleased to license this custom index to V-Square, which is designed to track the performance of sector leaders based on relevant key ESG issues that are aligned with SASB’s Materiality Map. MSCI ESG and Climate Indexes are designed to provide institutional investors with effective and transparent tools to facilitate integrating ESG and Climate considerations in their investment portfolios and align their benchmarks with their objectives.”

For more news and information about V-Square, visit the www.vsqm.com.