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Socially Responsible Investment

FundQuest Advisor is a pioneer in ESG* fund research, having set up a proprietary ESG fund rating methodology in 2014. FundQuest Advisor incorporates ESG and SRI* analysis within its recommendations of funds and asset management companies as a strong component of its culture.

Environmental, Social and Governance (ESG) scoring

FundQuest Advisor can provide a ranking based on extra-financial/ESG criteria of recommended asset managers/funds in each sector, in addition to the usual criteria taken into account in the assessment of recommended funds:

  • More than 110 asset management companies rated on their ESG & SRI approach
  • All selected active strategies with an ESG score (around 250 funds)

Our analysts perform a qualitative rather than quantitative ESG rating of the funds and managers we select to assess the effective implementation of their ESG practices and inclusion of extra-financial criteria in their investment process.
FundQuest Advisor’s proprietary ESG scoring system has been built around clear and strong principles:

  • A consistent and systematic approach across all asset classes and sectors to maintain scoring homogeneity
  • A single methodology applied to both mainstream and SRI funds, with strict rules to limit subjectivity/reduce room for interpretation
  • ESG scores at both company level and fund level (with the latter integrating the ESG score of its company)

SRI buy-list

FundQuest Advisor also proposes a specific SRI fund selection based on differentiating approaches (negative screening, best-in-class/best-effort, positive screening/impact investing).

Currently our SRI buy-list comprises over 40 funds.

As with all our funds in selection, SRI funds have to pass our three-step selection process (quantitative, qualitative and risk due diligence analysis) before we evaluate ESG criteria applied to the investment process which notably verifies:

  • Specific extra-financial constraints applied to the investment universe
  • Use of quantitative and qualitative criteria and ESG research in the investment process
  • Inclusion of financial and extra-financial requirements in portfolio construction methodology
  • Set-up to monitor and control compliancy to SRI investment constraints

A systematic, homogeneous and consistent approach needs to be applied to all funds so as to compare correctly those funds marketed as SRI.
At FundQuest Advisor, we believe that assessing qualitatively the type and level of ESG criteria implemented in the investment processes of the funds is the best way to make sure that it is managed in line with what is claimed by the asset manager, versus relying on pure quantitative data/analysis which are not based on a full 100% scope of the investments that can be made by the fund and its characteristics.

* ESG: Environmental, Social and Governance; SRI: Socially Responsible Investment