AIA launches index to identify firms that promote equality

Natixis Investment Managers’ Active Index Advisors (AIA), has launched a new index that helps to identify which firms and funds promote diversity, equity and inclusion (DE&I), and those that don’t.

The newly created Racial Equity Investment Portfolios from Natixis’ customised indexing division also helps to avoid or divest from companies that “cause, contribute to, exploit or profit from racial injustice”, confirmed the company. Utilising research and proprietary data from third-party providers, including JUST Capital and Venn Diagram Partners, AIA’s Racial Equity approach focuses on investing in companies that factor changing US demographics, and the economic power of underrepresented populations, into their respective business models.

“We believe that investors can be part of the solution to our nation’s racial inequality issues, and we are proud to provide an investment offering that could help divert funds away from fuelling racial injustice, and instead focus on promoting equality,” stated Curt Overway, President and Portfolio Manager of Active Index Advisors and Managed Portfolio Advisors.

PROMOTING RACIAL EQUITY

AIA believes that investments can directly address diversity in its portfolios, thanks to credible evidence that companies that are leaders in DE&I outperform their peers. This is backed by analysis from McKinsey & Company’s 2020 report, Diversity wins: How inclusion matters. In short, the report confirms that companies with greater diversity on their executive teams are more likely to outperform their peers in terms of profitability; and corporations with less diverse executive teams are more likely to underperform.

“Racial equity is tied to JUST Capital’s mission of building a more inclusive economy that can be beneficial for all Americans,” commented JUST Capital’s CEO Martin Whittaker. ”Through this partnership with Natixis, we look forward to engaging a wider pool of investors in our mission. Investors have a key role to play in terms of influencing social change around racial justice and equity, and in doing so, driving greater returns.”

Adding to his comments, Anthony Rust, Managing Director of Venn Diagram Partners, stated: “A growing body of evidence shows companies that demonstrate diversity, equity and inclusion practices can lead to positive performance, and we are excited to partner with AIA to provide investment solutions that aim to do exactly that. There’s also an added societal benefit of investing in and steering capital towards companies who promote, incorporate and embrace DE&I – and away from companies who have a history of indifference, or a business model that perpetuates racial injustice and inequities.”

SOCIALLY CONSCIOUS INVESTMENT PRACTICES

The AIA Racial Equity approach applies both positive and negative screenings to include companies that aim to achieve greater employee satisfaction, reduce conflicts and improve decision-making processes. Meanwhile, the portfolios exclude those associated with racial inequality and unequal access to health care, environmental controversies and discriminatory lending practices. Natixis’s Multicultural and Diversity Engagement (MADE), which champions the firm’s DE&I efforts, provided valuable input in the construction of these portfolios.

“Our research has consistently shown that Americans want their investments to align with their values, and the AIA Racial Equity Portfolios empower individuals to put their money to work by supporting companies that are helping to make a difference,” noted David Giunta, CEO of Natixis Investment Managers in the US. “The additional screening to AIA’s S&P 500 strategy promotes more socially conscious investment practices and enhances investors’ peace of mind.”