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BNP Paribas partners with Research Affiliates on RAFI ESG strategy
By Sarah Lizee
Olympia, Wash., April 12 – BNP Paribas partnered with Research Affiliates LLC to launch the new RAFI ESG strategy, according to a Research Affiliates press release.
The smart beta strategy aims to help investors achieve the dual objectives of social responsibility and long-horizon outperformance.
Research Affiliates said the strategy does this by “applying the Fundamental IndexTM approach, which has historically been shown to outperform the cap-weighted benchmark,” and supplementing traditional ESG metrics by adding the dimensions of financial discipline and gender diversity.
BNP will become an exclusive provider of structured products linked to the RAFI ESG indices, and as a swap counterparty, will provide marketing support for the implementation of these strategies.
RAFI Indices, LLC, a sister company of Research Affiliates, will publish and license the RAFI ESG Index series.
The RAFI ESG strategy incorporates RAFI weights with a composite score of each security’s environment, social, governance, financial discipline and diversity ratings.
The financial discipline score uses metrics that are associated with generating sustainable long-term performance. For the diversity score, metrics are used to determine a firm’s commitment to gender diversity, with particular attention paid to women in management, in the C-suite and on company boards.
Research Affiliates said it also plans to launch a stand-alone RAFI Diversity strategy later this year.
BNP Paribas is Paris-based banking and financial services company. Research Affiliates is a smart beta strategies company Based in Newport Beach, Calif.
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