Russell Investments launches responsible investment ETF based on demand from Australian investors
Russell Australian Responsible Investment ETF offers cost-effective access to screened Australian shares
SYDNEY, 1 April, 2015 – Responding to increasing demand from Australian investors and the rapid growth in the usage of exchange-traded funds (ETFs), Russell Investments has launched the Russell Australian Responsible Investment ETF, giving investors simple access to a low-cost and transparent portfolio that is weighted towards companies that have a demonstrated commitment to responsibility in environmental, social and governance (ESG) factors.
According to the Responsible Investment Association Australasia, as of December 2013, managed core responsible investment portfolios totalled $25 billion in Australia, which increased significantly from $15 billion in December 2012. Similarly, Australian investors’ interest in ETFs continues to grow, with 86% of growth1 in the $15 billion dollar ETF market coming from net inflows.
Nicki Ashton, Russell Investments’ Head of Strategic Partnerships in Australia, said, “We’ve been approached by various institutions to develop an ETF that focuses on socially responsible investing, specifically taking ESG considerations into account. We believe RARI provides Australian investors with a cost-effective, transparent way to access socially responsible investing.
In addition to addressing ESG factors, RARI seeks to improve expected future income - including franking credits and focusing on dividends - to help investors meet their overall return objectives,” added Ms Ashton.
RARI tracks the performance of a custom-built smart beta index, the Russell Australia ESG High Dividend Index, which incorporates both positive and negative screening. Positive screening is driven by ratings developed by Sustainalytics, a third-party provider specialising in ESG research and analysis, to tilt the index in favour of shares with positive ESG characteristics. Negative screening is driven by exclusions list criteria determined by a responsible investment committee.
"A responsible investment committee was established specifically for RARI, consisting of independent representatives from responsible investment-focused institutions and industry bodies," adds Ashton. "The committee reviews and determines an exclusions list for the Russell Australia ESG High Dividend Index in accordance with widely recognised criteria."
Portfolio Manager James Harwood, said, "Russell Investments is combining a disciplined approach to responsible investing with our proven expertise in tilting towards stocks that deliver higher dividends. The approach we're taking with RARI is similar to what we've employed for our extremely successful Russell High Dividend Australian Shares ETF, RDV. It's a natural extension of our capabilities and helps address the increasing demand for responsible investment solutions."
1As of 31 December 2014. According to ASX data, the ETF market in Australia has more than tripled in value since 2010.
About Russell Investments
Russell Investments is a global asset manager and one of only a few firms that offers actively managed multi-asset portfolios and services that include advice, investments and implementation. Russell Investments stands with institutional investors, financial advisors and individuals working with their advisors–using the firm's core capabilities that extend across capital market insights, manager research, asset allocation, portfolio implementation and factor exposures—to help each achieve their desired investment outcomes.
Russell Investments has more than AUD $337.9 billion in assets under management (as of 30/9/2015) and works with more than 2,500 institutional clients, independent distribution partners and individual investors globally. As a consultant to some of the largest pools of capital in the world, Russell Investments has $2.4 trillion in assets under advisement (as of 12/31/2014). The firm has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell Investments also traded more than $1.7 trillion in 2014 through its implementation services business.
Headquartered in Seattle, Washington, Russell Investments operates globally, including through its offices in Seattle, New York, London, Paris, Amsterdam, Milan, Dubai, Sydney, Melbourne, Auckland, Seoul, Tokyo, Shanghai, Beijing, Toronto, Chicago and Milwaukee. For more information about how Russell Investments helps to improve financial security for people, visit https://russellinvestments.com/au/ or follow @Russell_Invest.