The Russell Investments Low Carbon Global Shares Fund - Class AUDH ("Fund") provides investors with a sustainable investment solution that supports the management of climate change risk and the transition to a low carbon economy.
The Russell Investments Low Carbon Global Shares Fund - Class AUDH is an enhanced passive / smart beta fund that uses a systematic portfolio construction approach, starting with the MSCI All Countries World Index (ACWI) ex Australia, and invests directly in global shares, in both developed and emerging markets. Currency exposures are largely hedged back to the Australian dollar.
The Fund utilises our proprietary decarbonisation strategy which aims to achieve the following relative to its benchmark (MSCI ACWI ex Australia):
- a 50% reduction in carbon footprint;
- a 50% reduction in carbon reserves;
- a targeted reduction in coal exposure (through the exclusion of companies that derive more than 20% of their revenue from coal-related activities (i.e. extraction and/or power generation);
- an increased exposure to renewable energy; and
- maintain or improve the portfolio's overall 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 (targeted 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).