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Welcome. This website is intended solely for the use of institutional investors, consultants and other professionally recognized financial intermediaries in specific countries. Intech Investment Management LLC (“Intech”), is an investment adviser registered with the United States Securities & Exchange Commission. Intech is not permitted to offer products and services in all countries. It is the responsibility of prospective investors to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdictions, including the legal requirements and tax consequences within the countries of their citizenship, residence, domicile and place of business with respect to the acquisition, holding or disposal of shares or securities, and any foreign exchange restrictions that may be relevant thereto. The products and services referred to in this website are not offered to any person or entity in any jurisdiction where the advertisement, offer or sale of such products and services is restricted or prohibited by law or regulation or where we would be subject to any registration or licensing requirement not currently held by Intech or our affiliates. If Intech does not offer a website for your country, please visit www.janushenderson.com.

Australia Wholesale Client Confirmation

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This Website is intended solely for the use of wholesale clients in Australia and their professional consultants and investment advisers and is not for general public distribution.

This material on this website is not intended for distribution to, nor should it be relied upon by, retail clients. If you are a retail or individual investor, then please leave this Website.

Intech is permitted to provide certain financial services to wholesale clients in Australia pursuant to an exemption from the need to hold an Australian financial services licence under the Australian Corporations Act 2001. Intech is regulated by the Securities Exchange Commission of the U.S. under U.S. laws, which differ from Australian laws.

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Decline - I am not a wholesale client

Environmental, social, and governance (ESG) portfolio characteristics have become an increasingly important consideration for investors over the past decade. However, effectively applying ESG characteristics in portfolio management has remained challenging due largely to a general lack of data history and consistency.


ESG_history_consistency_blog

 

These issues have created tremendous noise and confusion across many ESG investment stakeholders. Rating providers have yet to reach consensus on standardized research criteria, and, in fact, most have themselves not even followed consistent approaches to ESG ratings through the years. Many investment managers also frequently introduce their own ESG proprietary rating standards, adding to the measurement variances across the industry. And, asset owners themselves can vary widely in what they mean by “ESG” in relation to their portfolios.

Implementing ESG research in this cloudy landscape can often be time consuming and resource intensive, typically relying on bottom-up, fundamental analysis on a company-by-company basis. However, our research shows that targeting portfolio-level ESG outcomes may not require the extensive individual-security research that has become the norm for most socially responsible investments.

Focusing on Portfolio Characteristics vs. Stock Ratings

In our own ESG-managed portfolios, we strive to understand how ESG considerations can affect portfolio exposures, which in turn can contribute to shifts in both alpha potential and risk profile. A vital step in developing this understanding is to reconstruct ESG portfolios over long periods of time, preferably multiple decades, to allow studying how the corresponding exposures behave under a variety of market dynamics.

“...we use statistical analysis of third-party ESG ratings to identify which systematic factors are persistent and dominant. This allows us to express the stable characteristics of ESG ratings at the portfolio level in non-ESG terms...”

In this process, we use statistical analysis of third-party ESG ratings to identify which systematic factors are persistent and dominant. This allows us to express the stable characteristics of ESG ratings at the portfolio level in non-ESG terms, allowing for an extrapolation over history—much longer than time horizons provided by ESG rating services—and essential for robust estimates of ESG risks.

The result is a practical approach that has proven to be reliable, repeatable and more related to managing systematic than idiosyncratic risks, offering a far more efficient portfolio-management model.

Find Out More

Our latest research paper highlights how this process works, using a simplified proof-of-concept example. Download it here.

ESG Made Easier  Constructing ESG Portfolios with Non-ESG Data Read Paper

 

The information expressed herein is subject to change based on market and other conditions. The views presented are for general informational purposes and do not purport to address the financial objectives or specific investment needs of any individual reader, investor, or organization. This information should not be used as the sole basis for investment decisions. All content is presented by the date(s) published or indicated only, and may be superseded by subsequent market events or other reasons. Past performance is no guarantee of future results. Investing involves risk, including possible loss of principal and fluctuation of value. Information that is based on past results or observations is not necessarily a guide to future results, and no representation or warranty, express or implied, is made regarding future results.