Custom Indexing Leader Canvas® on Constructing Environmentally Focused Portfolios

·2 min read

O’Shaughnessy Asset Management, LLC (OSAM), a leading quantitative asset management firm, today released a brief paper on constructing environmentally focused portfolios using Canvas, an industry-leading Custom Indexing platform. While the paper specifically deals with personalized environmental exposure, the Canvas platform enables financial advisors to access and customize more than 50 ESG and SRI screens for client portfolios.

According to Morningstar, "sustainable investing" funds more than doubled new assets from 2019 to 2020 and accounted for a quarter of total inflows to mutual funds, indexes, and ETFs.1 Additionally, of the E, S, and G pillars, the Environment attracts the greatest focus among investors. Accelerating investor demand, however, presents advisor challenges as legacy "off-the-shelf" products (funds) are inadequate for solving specialized and complex client situations. Upwards to 50 percent of advisor conversations on Canvas center around ESG needs for a large client where pooled vehicles are unsatisfactory. As in any area of portfolio construction, tax management, or performance reporting, advisors need to ensure that client goals are met and exceeded.

"ESG investing is highly personal," said Patrick O’Shaughnessy, CFA, Chief Executive Officer of OSAM. "Individuals often start with divestment from certain stocks and then graduate to overweighting the stocks of companies that exhibit positive behaviors. We find that the ability for an advisor to build to spec and easily tilt a portfolio on environmental issues such as water stress, carbon, and deforestation is incredibly powerful. The Canvas platform allows advisors to deliver personalized ESG and SRI solutions and really lead clients throughout the process."

The NEW paper can be found here.

Regardless of expressed values, OSAM is committed to helping financial advisors solve for ESG investing challenges. Among them are:

  • Agreeing on ESG goals and investing definitions

  • Allaying concerns on investment returns

  • Combining factor investing and tax management with ESG goals

  • Providing customization efficiently and economically – building for the individual

  • Tracking and reporting performance

For interested advisors, a more robust ESG paper focused on advisor challenges can be read here.

About OSAM

O’Shaughnessy Asset Management, LLC (OSAM) is a quantitative asset management firm based in Stamford, CT. The firm delivers a broad range of equity portfolios to institutional investors, individual investors, and high-net-worth clients of financial advisors. OSAM also serves as the investment advisor for a U.S. mutual fund and as a sub advisor to a family of mutual funds in Canada. The firm’s team has managed client assets since 1996. For more information on Canvas, please go to canvas.osam.com.

1 Morningstar. February 10, 2021. Sustainable Funds U.S. Landscape Report.

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Jonathan Mairs
Ax Communications
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