Products June 16, 2022

Investment Product and Service Launches

MSCI launches next generation of equity factor models, while Robeco launches quant credit strategy focused on SDGs and climate.

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MSCI Launches Next Generation of Equity Factor Models

MSCI Inc. has announced the launch of the next generation of the MSCI Equity Factor Models. The models feature three new factors designed to help investors better understand what drives portfolio risk and performance as market conditions change.

The first new factor, “Sustainability,” integrates an environmental, social and governance sub-factor alongside a carbon efficiency sub-factor that measures a company’s emissions relative to its size. The second, “Crowding,” uses multiple measures to assess how a stock is priced relative to its own history. Finally, “Machine Learning” leverages data science and natural language processing to evaluate the relationships between different variables that affect a stock’s returns.

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According to MSCI, the latest models allow institutional investors to construct portfolios across new and familiar factor dimensions, and to run comparisons to industry peers and benchmarks. The models also enhance the transparency of portfolio characteristics through improved handling of IPOs, improved coverage and dynamic industry exposure analysis.

The new models include the MSCI Global Equity Factor Model and the MSCI USA Equity Factor Model, which are designed for long-term investors. The MSCI Global Equity Factor Trading Model and the MSCI USA Equity Factor Trading Model are for investors managing strategies with shorter investment horizons. The new models will be available through multiple distribution channels, including Snowflake’s Data Cloud and select third-party partners, and from MSCI directly via the proprietary Barra Portfolio Manager and BarraOne platforms.

The new MSCI Equity Factor Models also evaluate pre-merger special purpose acquisition corporations, expanding the investment opportunity set for investors as well as improving the calculation of some existing factors. 

Robeco Launches Quant Credit Strategy Focused on SDGs and Climate

Robeco has launched Global SDG & Climate Multi-Factor Credits, its first quantitative fixed-income strategy focused on climate and the United Nations Sustainable Development Goals.

While the strategy’s performance is driven by Robeco’s multi-factor credit selection model, which has been applied to client portfolios since 2012, it has sustainability as its primary objective. Committing to carbon footprint reduction, the strategy is measured against the Solactive Paris-Aligned Global Corporate Index.

The portfolio’s average carbon emissions are kept below the Paris-aligned credit benchmark, which has 50% lower carbon emissions than the mainstream credit benchmark and decarbonizes by 7% each year.

Applying Robeco’s proprietary SDG framework, the strategy invests in companies that have a measurable positive contribution to the SDGs. The strategy also incorporates other sustainability dimensions like reducing ESG risk, water use and waste generation, and excludes companies that do not meet the required standard of sustainability.

In addition to its sustainable investment objective, the strategy pursues the provision of long-term capital growth. Global SDG & Climate Multi-Factor Credits aims to outperform the Solactive Paris-Aligned Global Corporate Index by 50 basis points over a full economic cycle.

Robeco’s quant fixed-income team, co-headed by Patrick Houweling, manages the strategy.

Deals & People June 16, 2022

The ERISA Industry Committee Revamps Organizational Priorities

The committee has named a new president and its first chief operations officer following a two-day planned meeting where the organization discussed its short- and long-term polices for the year.

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The ERISA Industry Committee announced today that James Gelfand, currently executive vice president, has been promoted to co-lead the association as president. Annette Guarisco Fildes, ERIC’s president and CEO since 2015, will remain as the organization’s CEO.

Additionally, Kathleen Carr-Smith, vice president of membership and strategic partnerships, will become the organization’s first chief operations officer.

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The promotions of Gelfand and Carr-Smith are effective on June 16, following the ERIC board’s two-day planning meeting this week.

In his new role, Gelfand will be responsible for leading ERIC’s public policy and legal advocacy work, as well as its membership, strategic partnerships and public affairs activities. He will work with the CEO to manage all aspects of the association.

Throughout his tenure with ERIC, Gelfand has worked with member companies to develop and advance public policies to support their ability to design and administer health plans, including legislative and regulatory advocacy at the federal, state and local levels. Gelfand has participated in leadership of the association, building relationships within the benefits community while working to advance ERIC’s mission and values.

Early in his career, Gelfand worked as a lobbyist for ERIC. He returned in April 2016 after leading the federal affairs team at the March of Dimes Foundation, where he advanced policies to improve the health of women and children. He previously led health policy efforts for the U.S. Chamber of Commerce and served as counsel to former Senators Olympia Snowe, R-Maine, and Tom Coburn, R-Oklahoma, covering an array of issues. He earned his J.D. at George Washington University Law School and his undergraduate degrees in political science and legal studies at Northwestern University.

Carr-Smith has been responsible for setting and guiding ERIC’s strategy for membership and strategic partnerships. In her new role, she will be responsible for ERIC’s internal operations efforts, while continuing her role involving membership and strategic partnerships. Before joining ERIC, Carr-Smith was executive vice president of communications with the National Ready Mixed Concrete Association, where she led the group’s membership, sponsorship and branding efforts. Previously, she was director of meetings and conventions for the Council for Responsible Nutrition and served as director of membership and meetings at Jewish Women International.

Plotting the Course for the Remainder of the Year

At its meeting this week, the ERIC board approved the organization’s short- and long-term priorities that support the ability of large employers to design and administer benefits for their workforces.

Moving forward, ERIC’s policy priorities are centered around protecting the Employee Retirement Income Security Act of 1974 and working to ensure national uniformity. According to the organization, large employers who operate in multiple states need the consistency and certainty provided by ERISA to ensure that they can offer uniform, national benefits to their employees, employees’ families and retirees.

ERIC will continue to work to shape rules and legislation to help large plan sponsors efficiently provide generous benefits in a cost-effective way. It will also work to change what it calls “well-intentioned but counterproductive rules” that harm workers and retirees with “inflexible directives and limits on efficiently using benefit plan resources.”

In the area of health care, ERIC sees the need for functioning markets and affordable costs as its primary challenges. The organization says it will work through federal and state advocacy to build and restore competitive markets. It supports reforms to the health care system that will drive value for patients and for the employers who sponsor their health benefits, whether that involves telehealth, prescription drug policies, payment reforms, safety, transparency or mental health support.

On retirement and compensation, the organization says issues of flexibility, costs and administrative burdens—and helping participants—are paramount to ERIC and its member companies. As such, ERIC will work to promote policies that reduce barriers and increase opportunities to make the most from retirement savings.

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