Dimensional Fund Advisors, a global leader in systematic investing, has launched the Emerging Markets Sustainability Core Equity Fund and the Global Sustainability Short Fixed Income Fund.
The funds use the firm’s overarching sustainability investing approach, which targets a meaningful reduction in exposure to companies with high greenhouse gas (GHG) emissions intensity and potential emissions from fossil fuel reserves. They also take into consideration other issues of concern to sustainability investors, including tobacco, factory farming and child labour.
“There are many ways to approach sustainable investing. Dimensional believes you should have a clear focus on specific sustainability goals; good data to measure progress towards them; and transparent reporting on the results,” said Jim Whittington, Dimensional’s Head of Responsible Investment.
“Many investors are worried about climate change. Dimensional does not rely on ESG ratings, which are often subjective and inconsistent, as the basis for its sustainable strategies. We focus instead on reducing the funds’ exposure to emissions, the most significant driver of climate change. Unlike many other ESG factors, most companies have a standard way of reporting their GHG emissions, meaning these can be more easily measured and compared.
“Our sustainability approach allows investors to align their portfolio with their values without compromising on sound investment principles such as low costs, broad diversification and the systematic pursuit of higher returns.”
These funds expand upon Dimensional’s suite of sustainability strategies, which already include the Global Sustainability Core Equity Fund (which invests in developed markets) and the Global Sustainability Fixed Income Fund. With combined assets of USD 2.6 billion as of December 2021, the two funds have grown substantially in recent years.
With the new Emerging Markets Sustainability Core Equity Fund and the existing Global Sustainability Core Equity Fund, Dimensional’s sustainability equity strategies now cover both developed and emerging markets. In fixed income, combining the Global Sustainability Short Fixed Income Fund with the existing Global Sustainability Fixed Income Fund allows investors to vary their term and credit exposure.
“We now offer investors a more sustainable approach to systematic investing in global equity and bond markets,” said John Romiza, Co-CEO of Dimensional UK. “The new funds represent more tools to implement Dimensional’s sustainable approach right across an investor’s global balanced portfolio.”
Jim Whittington was appointed as Dimensional’s Head of Responsible Investment in November 2021. Prior to this, Jim served as a Senior Portfolio Manager and Vice President, on the front lines of Dimensional’s ESG initiatives working with clients, managing portfolios, and representing the firm with industry organisations. He and his North American counterpart, Lacey Huebel, lead Dimensional’s decades-long commitment to science-led, systematic sustainable investing.