Deutsche Bank and Arabesque Partners, an Anglo-German asset management firm, have rolled out a new line of investment products that apply a quantitative stock selection mechanism to environmental, social and governance (ESG) investing.
The new offering will track the returns of the Arabesque Prime and Systematic indices that are designed and operated by Arabesque.
Arabesque Prime Fund is a smart beta fund that combines sustainability data with fundamental equity analysis and Arabesque’s proprietary earnings pressure technology.
While, Arabesque Systematic Fund is a balanced global equity fund that provides risk-controlled upside by dynamically allocating between cash and stocks from the Arabesque Investment Universe.
Deutsche Bank head of equities & hybrids structuring for Europe Sean Flanagan said: "The aim of the partnership is to allow investors to invest in a sustainable way without having to sacrifice return performance. There is a widespread assumption that sustainability comes at a cost, which is a reduced rate of return. But Arabesque’s combination of environmental, social, and governance selection criteria and performance has challenged that assumption."
"We see the cooperation with Arabesque as a crucial step to develop our ESG-footprint and continue building our ESG platform."
Arabesque Partners head of ESG research and advisory Andreas Feiner said: "ESG-based investing is one of the most significant trends in financial markets for decades. Over time, it will not be a question of whether investors will integrate ESG information in their portfolio selection but moreover when, how and with whom."
Arabesque’s investment technology processes more than 100 billion data points to select an investment universe of global stocks that deliver superior returns, integrating ESG data with quantitative investment strategies.
The company screens thousands of stocks to identify around 1000 firms that comply with its corporate responsibility guidelines and demonstrate strong environmental, social and governance performance.