HomeRI ResourceAcadian Asset Management LLCConstructing Superior Sustainable Portfolios
Research and White Paper

Over the past decade, investors have pursued a growing range of RI objectives. Increasingly, investors recognize the alpha potential and risk mitigating properties of RI solutions. In addition, Sustainability investors often prefer exposure to companies with strong ESG practices even if they don’t view those attributes as additive to investment performance, perhaps driven by a Sustainability-focused mission or regulatory requirements. Regardless of their motivations, RI- sensitive organizations must still meet their fiduciary investment obligations.

In achieving Sustainability objectives, the choice of implementation approach is crucial. ESG investing often involves challenges, including poor data coverage and murky trade-offs between portfolios’ RI and investment attributes. In this note, we demonstrate how the sophisticated quantitative investing process is distinctively well-suited to confront these challenges, bringing to bear a broad investment universe to increase flexibility in stock selection, data science techniques that expand and enrich the ESG information set, and systematic portfolio construction to reduce unintended risks and costs. We also provide a sense of the investment impact associated with many prevalent Sustainability objectives.