The Fund aims to achieve its investment objective by investing in a diversified portfolio of long equity positions of developed and Emerging Markets companies (excluding Australia) that the Investment Manager has identified as attractive per the filtering, diversification, and ESG scoring processes.
The fund seeks to achieve the investment objectives by screening the MSCI ACWI ex Australia index using proprietary screening and reweighting methodology with the goal of creating a portfolio with reduced exposure to what the investment manager believes to be undercompensated sources of risk in the equity market.
The Investment Manager evaluates all stocks in the Index according to proprietary measures of sustainable earnings growth, stock volatility, distress risk and speculation risk. This filter process is complemented by a reweighting methodology called PowerRank™ that seeks to address concentration risk by diversifying the portfolio’s positions away from, in part, the ‘mega cap’ names in the index. The Investment Manager then uses individual equities’ ESG score (a proprietary measure of ESG integration) to up-weight, down-weight, or further eliminate stocks from the portfolio.
Stocks which receive a ‘Pass’ from the ESG filter are up-weighted, stocks which receive a ‘Partial Pass’ from the ESG filter are still held in the portfolio but are down-weighted and stocks which receive a ‘Fail’ from the ESG filter are omitted from the portfolio entirely. The weight of any individual stock in the portfolio is therefore a function of how the stock fares in the fundamental screening process, the effect of the PowerRank process and the stock’s ESG score.
The investment manager then applies company level negative screen policies to the fund to exclude companies from the portfolio with direct revenue from soft commodities, controversial weapons and palm oil. Further details on these policies can be found on the AXA IM website
. The investment manager also applies a market level negative screen to the fund to exclude all companies in the GICS tobacco sector.