Equity tilts

Our process

We begin with replicating the holdings of the benchmark. By holding the same companies in the same proportions as the benchmark, we can generate returns closely aligned with it.

But by taking a significant number of small active weights against the benchmark, we go beyond mere replication. These tilt positions create portfolios with reduced carbon footprints, without compromising performance.

To ensure a superior ESG profile compared to the index, we actively use scoring across three key ESG areas:

• Environmental: We focus on carbon emissions. Our goal is to create a portfolio with a significantly lower carbon emissions profile than the market by reducing our weightings in the highest carbon emitters.
• Social: We take a lower exposure to companies that fail to meet the principles of the United Nations Global Compact. Additionally, we reduce exposure to companies with high revenues from tobacco or nuclear weapons.
• Engagement: Rather than excluding companies outright, we prefer an engagement approach. Our strategies aim to avoid poor governance by aligning with Royal London Asset Management's published good governance policy.