RAFI ESG is a thoughtfully designed smart beta strategy that helps investors achieve the dual objectives of social responsibility and long-horizon outperformance.
AT A GLANCE
Integrates environmental,
social, and
governance metrics
Offers potential for improved returns with financial discipline and diversity
Utilizes the
return-enhancing engine
of fundamental weighting
Index Construction
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.
| RAFI Indices is built with the research, insights, and strategies of our sister company: |  |
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