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V-Square launches sustainable strategy for super funds

Chicago-based V-Square Quantitative Management has expanded its separately-managed account platform with the launch of its Global Equity ESG Materiality and Carbon Transition Indexed Strategy.

The strategy tracks the MSCI 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 withholding tax rates applicable to super funds.

The chosen index reflects a universe consisting of large and mid-capitalization companies across 23 developed countries excluding Australia and 24 emerging countries.

“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,” said Glen Gee, head of ANZ asset owner client coverage at MSCI.

“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.”

V-Square sees the strategy as a solution for funds grappling with the requirement to adhere to APRA benchmarks that are, from a carbon perspective, not aligned with their Net Zero transition commitments. The 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 (photo at top).

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