Los Angeles Capital's investment philosophy is rooted in the belief that markets are dynamic and Investor Preferences for stock characteristics evolve continuously. The Firm's investment technology is adaptive and well-suited to capture insights into how non-traditional financial metrics, related to ESG, influence a stock's expected return. The Firm believes that incorporating ESG data into a multi-factor framework has the potential to improve forward-looking expected risks and returns over short, medium, and long time horizons. Los Angeles Capital believes that companies with improving governance characteristics will outperform over time, and that the management of a company's human capital and natural resources plays an important role in creating long-term value for shareholders. ESG criteria is integrated across all client portfolios through proprietary factors within the Firm’s quantitative stock selection Model. Through the Firm’s innovative factor modeling, portfolio construction techniques, risk management considerations, and active ownership the Firm takes a comprehensive approach to Responsible Investing. For investors seeking more targeted ESG objectives, the Firm constructs customized portfolio solutions.
Custom ESG Solutions
Sustainability-focused Objective: The Firm has developed a proprietary ESG Model that incorporates a stock’s ESG profile as an explicit input to the portfolio construction process in order to identify high quality companies with attractive risk, return, and sustainability characteristics. This approach emphasizes the long-term value creation prospects for a company through the lens of sustainability and results in an improved ESG profile while harnessing the benefits of the Firm’s adaptive alpha generation strategy.
Climate Considerations: To meet the needs of client carbon budgets, Low Carbon optimization techniques are applied to achieve specific carbon emission levels or reduction targets. The Firm provides carbon footprint reporting and scenario testing for various warming scenarios, and is able to implement considerations for forward-looking climate-related risks and opportunities.
Exclusionary Screening: The Firm incorporates exclusionary screens for investors seeking to restrict specific securities for religious, ethical, environmental or other values-based considerations. The Firm works closely with clients to understand the impact of restrictions on portfolio risk and performance and has systems in place to ensure compliance with the client’s investment policy.
Custom Benchmarks: The Firm manages mandates against custom benchmarks upon client direction. This may include the omission of certain securities or industries, or the utilization of third party benchmarks with a low carbon or ESG orientation. The Firm’s proprietary portfolio system offers seamless integration with data feeds from third party vendors.
Responsible Investing Policy Statement
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Active Ownership Policy Statement
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Global Investor Initiatives
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RI Transparency Report
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