Russell Investments Low Carbon Australian Shares Fund

Product Name

Russell Investments Low Carbon Australian Shares Fund

Issuer

Russell Investments

Category

Investment

Type

Fund or Trust

Target

Retail, Wholesale

Certified Since

2020

Asset Classes

Australian only equities

Markets

New Zealand, Australia

Investment Approaches

Sustainability themed, Positive Screening

It Includes:

  • Riaa icons 14 Education
  • Riaa icons 32 Green property
  • Riaa icons 12 Healthcare and medical products
  • Riaa icons 11 Impact investments
  • Riaa icons 10 Renewable energy and energy efficiency
  • Riaa icons 15 Social and sustainable infrastructure

It has some level of screening for:

  • Riaa icons 33 Fossil fuels

It fully excludes:

  • Riaa icons 36 Armaments
  • Riaa icons 35 Tobacco

Overview

Investment approach The Fund is designed to provide access to a broad range of Australian shares, with a reduced exposure to carbon emissions and fossil fuel reserves by 35% and 30% respectively compared to its benchmark. The Fund goes beyond carbon reduction alone, aiming to provide an increased exposure to the most sustainabl companies, by positively tilting the portfolio towards higher than average material ESG scores. The investment team uses a systematic portfolio construction approach beginning with the S&P/ASX 300 Accumulation Index. The team is then able to tilt the portfolio away from companies with high exposure to carbon-intensive activities and increase weighting in those companies with positive ESG characteristics. The Fund applies asset, sector, industry and country constraints and minimises active share to effectively deliver low tracking error. This portfolio construction process negates unintuitive outcomes that can arisewith other optimisation techniques.


Description


The Russell Investments Low Carbon Australian Shares Fund is an enhanced passive / smart beta fund that uses a sytematic portfolio construction approach, starting with the  S&P/ASX 300 Accumulation Index , and invests directly in Australian shares.

The Fund utilises our proprietary decarbonisation strategy which aims to achieve the following relative to its benchmark (S&P/ASX 300 Accumulation Index):
- a 35% reduction in carbon footprint;
- a 30% reduction in fossil fuel reserves;
- an increased exposure to companies with a high material ESG score

Additionally, the Fund strategy incorporates additional exclusion criteria in relation to companies involved with tobacco, nuclear weapons and uranium.

The Fund applies asset, sector, industry and country constraints and minimises active share in order to deliver low tracking error (tartgeted at 0.5% p.a.).

The Fund's investment approach is sustainability themed in that it provides investors with a sustainable investment solution that supports the management of climate change risk and the transition to a low carbon economy. In achieving this outcome, the Fund considers the value and measure of carbon, green energy and environmental, social and governance (ESG) characteristics. Additionally, the Fund applies specific exclusions criteria in relation to coal, tobacco, nuclear weapons, and uranium that aligns with current responsible investment market trends.it should be noted that the Fund's sustainability approach is intended to evolve and adapt over time in order to reflect changing market conditions, albeit within a risk-controlled framework.

The Fund uses a hybrid approach to its investment / portfolio construction process, preserving the strengths of each of the following common approaches to portfolio decarbonisation - divestment, sector neutral reallocation and optimisation. Our approach includes optimisation, negative screens, negative and positive tilts and integrates ESG factors (ESG integration).

Other products certified by the Responsible Investment Association Australasia (RIAA)

Russell Investments Australian Responsible Investment ETF

Russell Investments Low Carbon Global Shares Fund

Russell Investments Low Carbon Global Shares Fund - Class AUDH

Sign up to learn more and get updates on ethical and responsible investing