Climate focused strategy is the latest addition to Resource Efficient Fund Range
- Osmosis launches European focused Resource Efficient Fund amid rising investor demand for regionally focused products
- The systematically run long-only Fund seeks to identify European companies that are more efficient than their same sector peers and set to benefit from the transition to a more sustainable economy resource
- The Fund targets an outperformance of +2/3% above the MSCI Europe Index subject to benchmark relative sector and country constraints
- The strategy seeks to deliver significant reductions in ownership of Carbon (75%), Water (77%) and Waste (89%) * relative to the benchmark while remaining invested across the broader economy
The Osmosis Resource Efficient European Equity Fund targets better risk-adjusted returns than the MSCI Europe Index while significantly reducing exposure to carbon, water, and waste* – resulting in a significantly lower environmental footprint. The Fund is constructed utilising Osmosis’s proprietary environmental research, which identifies companies that are more resource efficient in creating economic value than their same sector peers and will allow investors to target an uncorrelated source of sustainable alpha from their European equity exposure.
The Fund has been developed based on the historical investment performance of a similar European strategy which the company has been operating as a model portfolio for a client since June 2014, and which has outperformed its benchmark since inception to end Dec ’20 (see full press release attached). The new Fund includes a neutral exposure to financials and is available in a UCITS fund structure.
The portfolio will be fully aligned with Osmosis’s ethical exclusion policy which excludes tobacco and all companies that are in breach of the UN Global Compact Principles.
As of 26 February 2021, Osmosis’s total environmental assets under management were at $2.3bn with over $1bn tracking its core suite of portfolios.
Ben Dear, CEO Osmosis says
“As the global macro picture becomes ever more complicated as governments seek to stimulate their economies, we are seeing a particular emphasis in the EU for a climate orientated recovery. As such we are seeing increased demand from investors for a regionally focused product. The European version of our increasingly popular Resource Efficient product range should attract those investors seeking to address environmental issues in a pragmatic and objective fashion, while simultaneously targeting and delivering better risk adjusted returns.”
Osmosis believes that to gain mainstream adoption, sustainable investment should not come at the cost of financial returns and that sustainability metrics, if quantifiable and objective in nature, can be applied to mainstream portfolios to generate alpha.
Climate change and pressure on natural resources, coupled with growing societal awareness, are drivers forcing corporates to implement sustainable production and business processes. Osmosis believes that those companies that are more resource efficient, having effectively monetised sustainability to the balance sheet, are more likely to outperform their peers over the long term. Quite simply, doing more with less will be rewarded.
The Model of Resource Efficiency
Through the development of its proprietary Model of Resource Efficiency, Osmosis is able to link corporate Resource Efficiency to economic value generation and financial performance, identifying a sustainable alpha signal. The Osmosis Resource Efficiency Factor is derived from an objectively driven research program and the unique approach focuses on reducing portfolio ownership of three key environmental metrics, Carbon, Water and Waste while targeting better risk-adjusted returns than the parent index.
* The foot printing metrics above have been calculated using a Total Metrics approach, apportioning carbon emissions, water consumption and waste generation to the investor based on an equity ownership perspective. Calculating the “owned” emissions, water and waste from each position in the portfolio and benchmark, and adding those metrics yields the total impacts for the portfolio. The figures shown are for the Fund at 26 February 2021.
**This Fund is not available for U.S. Investors. Separate accounts are available for U.S. investors using the same model and investment objective of the Fund.