- New fund offers reduced exposure to climate change risk while maintaining equity returns
Sydney, 27 February 2019 —Russell Investments has launched the first broad-market Australian shares product with reduced exposure to carbon emissions and fossil fuel reserves as well as positive tilting toward sustainable companies in the Australian market. The Russell Investments Low Carbon Australian Shares Fund complements the cutting-edge international shares fund that launched in late 2017; and both funds are designed with the firm's proprietary decarbonisation investment strategy.
Using the broad-market S&P/ASX 300 Accumulation Index as a starting point, Russell Investments' systematic portfolio construction approach tilts the portfolio away from companies with high exposure to carbon-intensive activities and increases weighting in those companies with positive environmental, social and governance (ESG) characteristics. The process also customises the fund to cater for the concentrated nature of the Australian share market.
"Our decarbonisation strategy commits to reducing exposure to carbon footprint by 35% relative to the benchmark and 30% lower exposure to fossil fuel reserves," said Portfolio Manager James Harwood. "In addition, we go beyond decarbonisation to increase exposure by 5% to companies with a high material ESG score. Our approach targets these objectives while maintaining a tracking error of just 1% relative to the benchmark."
Mr Harwood added that this rules-based solution is designed to help clients meaningfully reduce exposure to carbon-intensive holdings and invest more in carbon-friendly and sustainable investment opportunities, all without materially affecting performance.
The new fund is the latest development based on Russell Investments' active and robust sustainability research agenda, which will continue to benefit the fund as the decarbonisation strategy evolves over time to reflect the latest findings and best practice in sustainable investing.
"I'm excited to bring this leading-edge solution to clients who seek to reduce the level of carbon emissions within their Australian shares portfolio as well as to those who seek to address climate-change risk requirements from stakeholder or regulatory requirements," said Nicki Ashton, Head of Strategic Partnerships, Australian Institutional at Russell Investments.
Ms Ashton added that Russell Investments isn't a newcomer to the global trend toward sustainable investing. The firm has been a signatory to the Principles for Responsible (PRI) Investment since 2009. In 2018, Russell Investments received an "A" grade from the PRI for its approach to responsible investing.
More information on the fund and Russell Investments’ approach to sustainable investing is available here.
About Russell Investments
With more than 80 years of experience, Russell Investments is a global investment solutions provider, dedicated to helping investors reach their long-term goals. Russell Investments offers investment solutions in 31 countries, manages A$371 billion in assets (as of 31 December 2018) and provides consulting services on US$2.4 trillion in assets (as of June 30, 2018). Russell Investments specializes in multi-asset solutions and investment and implementation services with a goal of delivering the best investment strategies, managers and asset classes to its clients around the world.
Headquartered in Seattle, Washington, Russell Investments operates globally with 21 offices, providing investment services in the world’s major financial centers such as New York, London, Tokyo and Shanghai.
Issued by Russell Investment Management Ltd ABN 53 068 338 974, AFS Licence 247185 (RIM). This document provides general information only and has not been prepared having regard to your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your objectives, financial situation and needs. This information has been compiled from sources considered to be reliable, but is not guaranteed. Past performance is not a reliable indicator of future performance. This document is not intended to be a complete statement or summary of the Russell Investments Low Carbon Australian Shares Fund (Fund). Investing in the Fund has risks. You should consider these risks in light of your objectives, financial situation and needs. Any potential investor should consider the latest Product Disclosure Statement (PDS) for the Fund in deciding whether to acquire, or to continue to hold, an investment in any Russell Investments product. The PDS can be obtained by visiting www.russellinvestments.com.au or by phoning (02) 9229 5111. RIM is part of Russell Investments. Russell Investments or its associates, officers or employees may have interests in the financial products referred to in this information by acting in various roles including broker or adviser, and may receive fees, brokerage or commissions for acting in these capacities. In addition, Russell Investments or its associates, officers or employees may buy or sell the financial products as principal or agent. Neither RIM, Russell Investments or its associates, officers or employees guarantees the repayment of capital, the performance of any Russell Investments products or any rate of return referred to in this document.
Russell Investments' ownership is composed of a majority stake held by funds managed by TA Associates, with a significant minority stake held by funds managed by Reverence Capital Partners. Russell Investments' employees and Hamilton Lane Advisors, LLC also hold minority, non-controlling, ownership stakes.
AUSF2-01197. First Used: February 2019