RAFI ESG promotes sustainability, financial discipline, and gender diversity, while delivering the potential for added returns through a thoughtful smart beta approach.
- An integrated ESG strategy which overweights companies that rate well across various ESG themes and excludes companies engaged in the tobacco, gaming, weapons and fossil fuels industry.
- Supplements traditional ESG metrics with both financial discipline and diversity for improved return potential.
- Applies the Fundamental Index™ approach, a proven smart beta indexing strategy built on the principles of contrarian investing and disciplined rebalancing
Financial discipline measures a firm’s commitment to generating sustainable long-term performance rather than making decisions to benefit managers in the short run. The RAFI ESG Index series incorporates four measures of financial discipline that are aligned with long-term value creation and sustainable growth; high profitability, low investment, low issuance and dilution and low accounting accruals.
For gender diversity, the RAFI ESG Index series incorporates measures that determine a firm’s commitment to gender diversity, with particular attention paid to women in management, the c-suite and company boards.