Sustainable Equity QI

Smart equity solutions investing in low volatility and quality factors can offer diversified, cost-effective and defensive exposure to global equity markets

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Why consider investing in Sustainable Equities?

Recent events have reminded investors that uncertainty can come when least expected. From a pandemic to conflict in Europe and more recent crises of confidence in banks, knowing where to invest can be daunting.

At AXA IM, we have developed a smart equity strategy that is designed with the intention of helping investors navigate volatile and uncertain times, whilst still seeking to capture some of the long-term growth associated with investing in shares of companies.

What is factor investing?

Grounded in academic research, factor investing is a long-established method for investors to identify and classify common characteristics of companies, and the historical risk and return those characteristics have delivered.   When efficiently deployed with rich data sets and sophisticated analysis, factor investing can provide investors with diversified exposure to equity markets. Importantly, individual factors may offer different patterns of risk and return and, as such, investors can use factor investing to better target specific investment goals. Investors may choose to target just one factor or mix factors in a way that best matches their investment needs.

 

Our Sustainable Equities QI Strategy

We use an advanced form of factor investing to seek companies with high-quality and sustainable earnings, with an emphasis on those with low share price volatility.
  • Quality - Relative quality can be measured by the level and persistency of a company’s delivered earnings, perhaps some analysis of balance sheet health, and could include analysis of how earnings could grow or decline in the future. Typically, high-quality companies tend to deliver more consistent earnings and may experience less share price volatility.
  • Volatility measures the variation of stock price returns over time. A low volatility approach seeks to identify those stocks with the lowest levels of volatility in their share prices, in relative terms. These companies typically have stable fundamentals such as strong balance sheets and resilient earnings.

A blend of these factors has the potential to mitigate risk while capturing returns. Investing in less volatile stocks may lower a portfolio’s risk profile and reduce participation in market downturns, whereas investing in companies with high earnings sustainability may offer defensiveness in market downturns, while also capturing returns when markets rise.

Investing responsibly

Being sustainable is not just about earnings, and we also integrate environmental, social and governance (ESG) criteria into our analysis. Our strategy is designed with the aim to deliver low cost and attractive risk-adjusted long-term growth across market cycles, while targeting a better environmental footprint than its benchmark, the MSCI World index. For us, this is the definition of Sustainable investing. Our SFDR Article 8 strategy provides an entry point to diversified ESG exposure.*

As long-term investors, we aim to ensure our advanced factor strategies are implemented thoughtfully and efficiently, aiming to reduce risk and unnecessary costs for our investors.

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Investment strategies

Equities

Equity investing offers the opportunity to share in the returns generated by companies around the world, whether they are established leaders or dynamic smaller companies.

Discover our strategies

Risk warning

Investment in equities involves risks including the loss of capital and some specific risks such as counterparty risk, derivatives, geopolitical risk and volatility risk. Some strategies may also involve leverage, which may increase the effect of market movements on the portfolio and may result in significant risk of losses.

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