Identifies well-managed companies through measures of financial discipline and gender diversity. Integrating measures of financial discipline—high profitability, low investment, low issuance and dilution, and low accounting accruals—and gender diversity—focusing on the number of women in management, the c-suite, and company boards—identifies companies that are aligned with long-term value creation and sustainable growth.
Controls for headline risk and downside risk by screening for strong corporate governance and low volatility. Considering both narrow corporate governance practices (e.g., board of director independence, audit, and internal controls) and general business behavior (e.g., anti-competitive practices and responsible lobbying) helps control headline risk, while a consideration of volatility helps protect against downside risk.
Incorporates thoughtful design and implementation. Integrating ESG principles with the contrarian investing principles and the disciplined rebalancing of the Fundamental Index strategy—which uses fundamental measures of company size to select and weight companies—results in a non-price-weighted index strategy that aims to deliver excess return versus the cap-weighted benchmark.