Paris – October 6, 2020 – AP1, the leading Swedish pension scheme, and TOBAM, the Paris-based research driven quantitative asset manager, today announce the adoption of a new fossil-free approach to emerging market equity and global high yield exposures.
TOBAM now applies a 100% fossil-fuel free approach to the Anti-Benchmark® Emerging Markets Equity and Global High Yield strategies funds, which employ TOBAM’s proprietary Maximum Diversification® methodology. Meaning companies with significant involvement in the production, sales or extraction of fossil fuels (including coal, coal power generation, oil and gas) are excluded from the investment universes of both strategies.
TOBAM’s Maximum Diversification® approach is focused on building robust portfolios exposures rather than the result of the composition of individually selected securities Research suggests that, when combined with adequate sustainability criteria, it can offer a truly unique way to invest in a sustainable way without giving up the benefits of diversification in term of risk and return.
The fossil-free focus also aligns with TOBAM’s long-term, research driven investment view and its long-held sustainability beliefs which notably includes the application of a systematic carbon footprint reduction across all TOBAM’s portfolios and enhanced engagement.
Commenting on the adoption of the new fossil-free approach, Majdi Chammas and Tina Rönnholm, External Partnerships and Innovation at AP1 comment:
“We believe this initiative represents a real milestone, with TOBAM’s analysis clearly demonstrating that ESG can be incorporated via a systematic approach in vastly different asset classes, without sacrificing returns or the nature of an underlying investment thesis. This approach aligns perfectly with AP1’s commitments to both supporting sustainable development and secure optimal investment returns for the benefit of our scheme’s members.”
“We have been invested in the Maximum Diversification strategy for many years. This new development reconfirms the robustness of the approach”.
Tatjana Puhan, Managing Director and Deputy CIO at TOBAM comments:
“The further integration of ESG into our investment process while preserving the integrity of our approach is a significant achievement. Our research indicates that excluding assets involved in fossil fuel activities, does not significantly affect the profile of our approach in terms of performance, volatility, drawdowns, or the diversification benefit characteristics as measured by the Diversification Ratio®.
“Most interestingly our research has demonstrated that risk exposures remain virtually unchanged. This is one of the core properties of the Maximum Diversification approach: its capability to remain evenly exposed across all effective independent sources of risk available in the market.”
Notes to Editors:
Första AP-fonden (AP1) is one of five pension funds in the Swedish national income pension system (the AP Funds). AP1 has assets under management of SEK 355 billion (30 June 2020) in a portfolio consisting of listed equities, fixed income securities, currency, real estate, hedge funds, private equity funds, infrastructure and high yield. Investments are made worldwide. AP1 is a long-term investor and an active, engaged owner. As an owner the Fund imposes stringent demands in the areas of Environment, Social and Governance.
For more information, visit www.ap1.se
TOBAM is an asset management company offering innovative investment capabilities designed to maximize diversification. TOBAM’s Maximum Diversification® approach, supported by original, patented research and a mathematical definition of diversification, provides clients with diversified core exposure, in both the equity and fixed income markets. TOBAM manages $7.3billion (as of June 2020) and is composed of 47 professionals in 4 offices.
For more information, visit www.tobam.fr