New products and changes introduced over the last week include two mutual funds from T. Rowe Price and low carbon indices from MSCI.
Also, Corporate Knights Capital teamed with Solactive to launch another family of low-carbon indices.
Here are the latest developments of interest to advisors:
1) T. Rowe Price Adds Two Funds
The International Concentrated Equity Fund (PRNCX) will focus on companies that have solid positions in attractive industries, have an ability to generate visible and durable free cash flow, and can create shareholder value over time. It will be managed by Federico Santilli.
The Intermediate Tax-Free High Yield Fund (PRAHX) has as its principal strategy the generation of a high level of income that is exempt from federal taxes. It will be largely composed of a diversified array of revenue bonds that span both the lower and below investment-grade municipal bond universe, and features an intermediate-duration profile. James Murphy will manage the fund.
2) MSCI Launches Low Carbon Indices
MSCI Inc. has announced the launch of the MSCI Global Low Carbon Leaders Indices, consisting of companies with significantly lower carbon exposure than the broad market. The indices were developed at the request of and with insights from Fourth Swedish National Pension Fund AP4, Fonds de Réserve pour les Retraites (FRR) and Amundi, who were looking for representative benchmarks in the transition to a low-carbon economy. MSCI then consulted on the proposed methodology with a variety of investors globally.
The indices are based on the MSCI ACWI Index, the global policy benchmark covering developed and emerging markets, and utilize MSCI ESG CarbonMetrics data from MSCI ESG Research Inc. The MSCI Global Low Carbon Leaders Indices address two dimensions of carbon exposure—carbon emissions and fossil fuel reserves—providing clients with an effective tool for limiting the exposure of their portfolios to carbon risk. While selecting companies with a lower carbon exposure, the indices aim to maintain a wide and consistent market exposure by minimizing the tracking error compared to the performance of the parent standard indices.
The indices have already been expanded with the addition of the MSCI Global Low Carbon Target Indices, which re-weigh stocks based on their carbon exposure in the form of carbon emissions and fossil fuel reserves. The indices are designed to achieve maximum carbon exposure reduction given a specific tracking error target while including all the companies in the parent index.
3) Corporate Knights Capital, Solactive Team on Low Carbon Indices
Corporate Knights Capital has partnered with Solactive to launch a family of low-carbon indices, aiming to provide exposure to best-in-class companies in carbon intensive sectors while maintaining benchmark exposure for companies in all other sectors. The new indices available include: Solactive CK Low Carbon U.S. Index, Solactive CK Low Carbon Europe Index, and Solactive CK Low Carbon Canada Index. The new index family has been designed to serve as benchmark or underlying for low carbon investment strategies.
The Solactive CK Low Carbon Index family uses the Sustainable Industry Classification System (SICS), established by the Sustainability Accounting Standards Board (SASB) to categorize industries based on resource intensity, sustainability impact and sustainability innovation potential. The indices ensure a minimum 50% reduction in carbon intensity against the market benchmarks, as verified by South Pole Carbon.
Read the Sept.19 Portfolio Products Roundup at ThinkAdvisor.