Whether because of personal convictions, risk-reduction objectives, or a changing regulatory landscape, investors are increasingly considering the importance of integrating environmental, social, and governance (ESG) issues into their investment guidelines. RAFI ESG is a family of strategies that combine various ESG investing themes with the benefits of our leading smart beta construct.
Traditionally, most ESG strategies have been actively managed. Identifying active managers that outperform net of fees, and having the discipline to stick with them, is difficult. In addition, many actively managed ESG strategies lack transparency or are inconsistent in their application of ESG themes to individual stocks. By relying on the RAFI™ Fundamental Index approach, RAFI ESG strategies retain the benefits of traditional passive investing: simple, rules-based, transparent, and low cost, while offering the potential for outperformance.
The FTSE4Good RAFI Index Series applies the FTSE RAFI Index methodology to companies demonstrating strong environmental, social and governance practices.
The FTSE RAFI ex-Fossil Fuels Index Series excludes companies that have a certain revenue and/or reserve exposure to fossil fuels.