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Research Affiliates Introduces New RAFI Diversity & Governance Strategy

•  RAFI Diversity & Governance integrates gender-diversity data with governance and financial discipline metrics to seek positive investment outcomes.

•  RAFI Diversity & Governance is built with the return-enhancing engine of fundamental weighting.

•  RAFI Indices, LLC, will construct, publish, and license the RAFI Diversity & Governance Index series.

•  For more information on the index series, email info@rafi.com

RAFI Diversity & Governance integrates gender-diversity metrics with empirically robust return drivers that are linked to good governance and financial discipline. It is designed for investors who seek to embrace the benefits of diversity while preserving the potential for long-horizon outperformance. The strategy is built using the Fundamental IndexTM approach, which has historically been shown to deliver outperformance versus a cap-weighted benchmark.


“At Research Affiliates, cognitive diversity has long been a driving force behind our research agenda and management practices,” explains Katy Sherrerd, PhD, CFA, President and Chief Executive Officer, Research Affiliates. “We believe this focus creates an environment that promotes collective intelligence and ultimately strengthens the foundation of our firm. Thoughtfully designed investment products that can improve performance and/or reduce risk, while delivering on socially conscious and sustainable investing, are a natural outcome of this focus.”


RAFI Diversity & Governance uses the proprietary gender leadership diversity methodology developed by LeaderXXchange℠, a change-driven organization that advises and promotes diversity and sustainability in governance, leadership, and investment. The methodology uses public data that companies disclose as well as proprietary databases from Paris-based environmental, social, and governance data provider Vigeo Eiris.


“Studies show that companies with greater percentages of women in leadership have the potential to improve financial performance. When women are underrepresented in leadership, the company can be less equipped to handle business challenges, understand customer needs, and approach problems from a different perspective,” explains Sophie L'Helias, President, LeaderXXchange. “Our gender-diversity metrics attempt to address this by focusing on a company’s commitment to promoting women and its results throughout the corporate leadership pipeline in management, the C-suite, and the company’s board.”


Michael Notat, Executive Director International Markets, at Vigeo Eiris, notes: “Gender diversity metrics and good governance are fundamentally linked. We are very proud to have been selected as the ESG data provider for the new RAFI Diversity & Governance strategy. It offers a unique and holistic approach that combines qualitative and quantitative performance to the investment community.”


Research Affiliates is partnering with BNP Paribas, a leader in impact and sustainable investing, to globally market, distribute, and support the implementation of the strategy. BNP is an exclusive provider of structured products linked to the RAFI Diversity & Governance indices, and serves as a counterparty for OTC swaps.


“BNP Paribas is a global company that understands it plays a key role in corporate social responsibility around diversity, gender equality, and the environment. As we help build a sustainable future, while promoting the bank’s performance and commercial offerings, we are proud of our deep partnership with Research Affiliates, an organization highly respected throughout the investment industry for its smart beta offerings and persistent innovations in the investment space,” says Josh Dunivant, Head of Delta One Sales Americas, BNP Paribas. “Through the RAFI Diversity & Governance indices, BNP Paribas will continue to provide Research Affiliates with the bank’s expertise in environmental, social, and governance investment solutions that enable clients to positively impact society and receive the desired level of performance for the risk taken,” adds Alexandre Billot, Director of EQD Solutions, BNP Paribas.


Sherrerd underscores: “Research shows that diverse teams who embrace collective intelligence make better decisions and are more innovative. Validating this finding in investment returns is handicapped by the lack of data. For RAFI Diversity & Governance, we combine diversity with other measures, particularly financial discipline, to create a better proxy for sound management practices, robust corporate governance, and a healthy company culture.”


Indices based on the RAFI Diversity & Governance strategy will be constructed, published, and licensed through RAFI Indices, LLC, a sister company of Research Affiliates.

For more information, please visit www.rafi.com

About RAFI Indices

RAFI Indices, LLC, is a California limited liability company established in 2016, which is a wholly owned subsidiary of Research Affiliates Global Holdings, LLC. RAFI Indices, LLC, constructs, publishes, and licenses various indices and does not offer or provide investment advice or offer or sell any securities, commodities, or derivative instruments or products. The RAFI trademark is used under license by RAFI Indices, LLC. The RAFI Indices, LLC, corporate name and all related logos are the exclusive intellectual property of RAFI Indices, LLC.

About Research Affiliates

Research Affiliates, LLC, is a global leader in smart beta and asset allocation. Founded in 2002 and based in Newport Beach, California, Research Affiliates is dedicated to creating value for investors and seeking to have a profound impact on the global investment community through its insights and products. The firm’s investment strategies are built on a strong research base and are led by Rob Arnott and Chris Brightman. Research Affiliates delivers solutions in partnership with some of the world’s leading financial institutions through their offerings of mutual funds, ETFs, separately managed accounts, and/or commingled accounts. As of June 30, 2018, about $197 billion in assets are managed worldwide using investment strategies developed by Research Affiliates.

Neither Research Affiliates, LLC, nor its related entities provide investment advice outside of the United States, Ireland, Australia, and Canada, and do not offer or sell any securities, commodities, or derivative instruments or products. Any such business may only be conducted through registered or licensed entities and individuals permitted to do so within the respective jurisdiction and only in conjunction with the legally required disclosure documents and subject to all legally required regulatory filings and/or exemptions.

The trademarks Fundamental Index and RAFI, and the Research Affiliates trademark and corporate name and all related logos, are the exclusive intellectual property of Research Affiliates, LLC, and in some cases are registered trademarks in the United States and other countries. Various features of the Fundamental Index methodology, including an accounting data–based noncapitalization data–processing system and method for creating and weighting an index of securities, are protected by various patents, and patent-pending intellectual property of Research Affiliates, LLC. (See all applicable US Patents, Patent Publications, Patent Pending intellectual property and protected trademarks located at https://www.researchaffiliates.com/en_us/about-us/legal.html#d, which are fully incorporated herein.)  Any use of these trademarks, logos, patented, or patent-pending methodologies without the prior written permission of Research Affiliates, LLC, is expressly prohibited. Research Affiliates, LLC, reserves the right to take any and all necessary action to preserve all of its rights, title, and interest in, and to, these.


Research Affiliates, LLC relies on an exemption from the requirement to hold an Australian financial services license by operation of ASIC Class Order 03/1100.

Media Inquiries

US: Tucker Hewes

Hewes Communications (New York)

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Email: hewesteam@hewescomm.com