APG launches sustainable indices in new partnership

Dutch pension asset manager, APG, has launched several sustainable indices in partnership with BlackRock and Qontigo.

The iSTOXX APG World Responsible Investment Indices (iSTOXX APG RI Index Family) consists of five responsible investment indices. The iSTOXX APG RI Index Family is not the ultimate in active investing, but it does have active components, APG member of the board, Ronald Wuijster, said.

APG managing director of quantitative strategies, Ronald van Dijk, added: “The basis of this product consists of the iSTOXX World Index over which five filters can be placed, depending on the preference of the customer. The first filter is 'exclusions'. By applying that, you exclude companies that do not meet certain sustainability requirements. You could call that the entry-level of this product. By applying additional filters, you increase the sustainability content of your investment portfolio.

“The criteria then become increasingly stringent and when all five filters are applied, the most sustainable portfolio is created. In this way you go further than just investing in, for example, the iSTOXX World Index. That makes it a somewhat more active form of index investing. As far as we know, there is no other index series yet, where a pension fund can consistently opt for an increasingly ambitious SRI policy over time.”

APG is primarily an active investor and not known for its passive strategies but Wuijster and van Dijk, said the provider wants to offer the best solution for its clients, which in certain cases, includes index products.

Although APG still advocates for a “very active form of investment”, Wuijster said that such a strategy results in higher costs and is only attractive for a certain asset size.

“Not every client has that size. There are smaller funds that want the low cost of an index product but want to be active on the ESG front (exerting a positive influence on sustainability and corporate governance). It is precisely for those funds that this product is suitable.”

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