News | July 13, 2021

Northern Trust Asset Management Launches Quality Low Volatility Low Carbon World Strategy


Northern Trust Asset Management (NTAM), one of the world’s leading investment managers, continues to expand its sustainable investment solutions with the launch of the Quality Low Volatility Low Carbon World (QLV Low Carbon) Strategy, an actively managed quantitative strategy focusing on high-quality, low-volatility stocks while maintaining lower carbon footprint relative to the MSCI World Index (“benchmark”).

The strategy is the latest sustainable investing solution from NTAM that aims to address climate risk while investing in high-quality low volatility stocks and is designed to provide a reasonable exposure to potential market upside while seeking to mitigate downside risk. The strategy complements NTAM’s Quality Low Volatility World (QLV World) strategy, which launched in 2015, and is the latest in a series of climate aware strategies launched by NTAM with carbon reduction objectives.

The QLV Low Carbon strategy aims to reduce a portfolio’s carbon footprint, seeking a reduction in the carbon intensity of the portfolio and potential emissions from fossil fuel reserves, relative to its benchmark. As of the inception date, the strategy achieved a 50% reduction in carbon intensity relative to the benchmark. Through tight risk controls, the strategy aims to limit sector and regional biases that can create unintended and/or uncompensated risks in a low volatility strategy.

“Many low volatility strategies tend to have high carbon intensity due to their overweight exposure to high carbon sectors that have lower volatility, notably utilities, which contributes to almost 50 percent of the carbon intensity of the MSCI World Index,” said Michael Hunstad, head of quantitative strategies at NTAM. “With an increased investor focus on carbon reduction across portfolios, this leads many investors to forego using low volatility strategies. Designed to limit exposure to both volatility and carbon, while employing risk efficiently and without sacrificing performance, the strategy helps investors manage climate risk while achieving their investment objectives. This is aligned with NTAM’s fundamental investment tenet: investors should be compensated for the risks they take in all market environments and any investment strategy.”

“This latest strategy underlines NTAM’s philosophy and commitment to sustainable investing,” said Julie Moret, global head of sustainability and stewardship at NTAM. “Sustainability is central to our investment capabilities, aligning with our belief that ESG considerations are financial considerations, effective management of which supports the delivery of long term financial success.’’

Entrusted with US$1.1 trillion of investor assets, NTAM is among the world’s largest investment managers. The firm helps investors navigate changing market environments so they can confidently realize their long-term objectives.

The firm is a UNPRI signatory and a founding signatory of the Climate Action 100+ initiative that engages with 167 companies representing 80% of corporate greenhouse gas emissions globally, as well as a founding member of the One Planet Asset Manager Initiative in which member asset managers commit to advance the understanding of the implications of climate-related risks and opportunities within long-term investment portfolios through engagement, research and sharing of investment practices. In addition, the firm is A+ Rated for Strategy and Governance by Principles for Responsible Investment and has been a member since 2009. And, NTAM is a Sustainability Accounting Standards Board (SASB) Investors Advisory Group Member and an official supporter of the Financial Stability Board Task Force on Climate-related Financial Disclosure (TCFD) – a consortium established in 2015 to develop a voluntary, consistent framework for companies to disclose climate-related financial risk to investors and other stakeholders.


About Northern Trust Asset Management

Northern Trust Asset Management is a global investment manager that helps investors navigate changing market environments, so they can confidently realize their long-term objectives. Entrusted with US$1.1 trillion of investor assets as of March 31, 2021, we understand that investing ultimately serves a greater purpose and believe investors should be compensated for the risks they take — in all market environments and any investment strategy. That’s why we combine robust capital markets research, expert portfolio construction and comprehensive risk management to craft innovative and efficient solutions that deliver targeted investment outcomes. As engaged contributors to our communities, we consider it a great privilege to serve our investors and our communities with integrity, respect, and transparency.

Northern Trust Asset Management is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Belvedere Advisors LLC and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 22 U.S. states and Washington, D.C., and across 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2021, Northern Trust had assets under custody/administration of US$14.8 trillion, and assets under management of US$1.4 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Please visit our website or follow us on Twitter.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Please read our global and regulatory information.

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