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In today's context, the challenge for investors is to find investment solutions that combine outperformance with ESG. At LBP AM, our Smart Beta offering stands out thanks to our innovative investment solutions that leverage the capabilities of our advanced calculation tools. But who are Smart Beta strategies really designed for, and why are they particularly relevant? Laurent Lagarde, Head of LBP AM's Quantitative Solutions division, provides the answers on video.
First of all, LBP AM has 10-year track record of Smart Beta management, with nearly €9 billion in AUMs, a range of open-end funds fully certified with the ISR V3 label, as well as bespoke institutional mandates.
We have already demonstrated our ability with our Smart Beta management to meet the needs of private clients for core portfolio solutions, of investors seeking geographically-focused ISR V3-labeled building blocks, and institutional clients with specific requirements, particularly in terms of ESG policy.
Our Smart Beta approach stands out by its exposure to drivers of outperformance; secondly by its focus on maintaining a low tracking error compared to traditional indices, while integrating both ISR V3 certification criteria and exposure to performance drivers; and thirdly, by the flexibility in our approach which allows us to incorporate specific criteria into portfolios.
It’s important to highlight that this is a systematic, controlled, and robust management strategy. It is characterized by rigorously analyzed data, tested and proven models that are continuously monitored, and a strong emphasis on research and development to regularly introduce improvements into our investment processes.
And what about outperformance? How do we aim to generate it? Our performance drivers are based on exposure to style premiums such as Value, Growth, Momentum, and Quality etc.—seven styles in total—each recognized for their ability to generate outperformance on average over the recommended investment horizon.
Our quantitative tools provide the computing power needed to perform extensive calculations. These tools allow us to characterize each style with numerous metrics and analyze these metrics across the full spectrum of securities in our investment universe. Comparing securities based on these metrics enables us to identify which stocks to prioritize for a given style.
Additionally, our tools allow us to determine the optimal weighting for each style, effectively combine exposures to these style premiums, and ensure that all desired criteria are met in the final portfolio.
Managing relative risk is a cornerstone of our approach, and that quantitative tools are always meant to serve a rational economic purpose.
All in all, LBP AM’s Smart Beta management allows us to combine outperformance and ESG through the creation and management of innovative investment solutions.