Insight

Building Paris Aligned Benchmark equity portfolios

Building Paris Aligned Benchmark equity portfolios

In a recent thought leadership piece, Invesco Quantitative Solutions (IQS) examined how factor investing can be used to create Paris Aligned Benchmark (PAB) equity portfolios that don’t take on excessive tracking error.

The Australian Equities team has taken this research a step further and examined exactly how a PAB ASX 300 portfolio can be created that not only takes on tracking error within an investor’s risk budget, but also delivers strong risk-adjusted returns.

Read the paper to learn more.

  • Don’t be blind just because a benchmark is Paris-aligned

    By Joshua Kothe, Erhard Radatz, Andre Roberts and Carsten Rother

    As investors try to structure their portfolios in accordance with the Paris climate targets, confusion may arise from the diversity of available strategies. To overcome this, we researched Paris-aligned objectives to better understand the sources of risk in low tracking error Paris-aligned portfolios using a 2-step factor-based process that balances Paris alignment with return performance.

Important Information

  • This document has been prepared only for those persons to whom Invesco has provided it. It should not be relied upon by anyone else. Information contained in this document may not have been prepared or tailored for an Australian audience and does not constitute an offer of a financial product in Australia. You may only reproduce, circulate and use this document (or any part of it) with the consent of Invesco.

    The information in this document has been prepared without taking into account any investor’s investment objectives, financial situation or particular needs.  Before acting on the information the investor should consider its appropriateness having regard to their investment objectives, financial situation and needs.

    You should note that this information:

    • may contain references to dollar amounts which are not Australian dollars;
    • may contain financial information which is not prepared in accordance with Australian law or practices;
    • may not address risks associated with investment in foreign currency denominated investments; and
    • does not address Australian tax issues.

    While any Invesco fund referred in this page may consider Environmental, Social and Governance (ESG) aspects to better manage risks and improve returns, it is not bound by any specific ESG criteria. The fund may invest across the ESG spectrum and will not necessarily exclude companies with controversial business areas – such as those with significant revenues from coal, fossil fuel, nuclear power, weapons and tobacco – from the investable universe. Information used to evaluate ESG factors may not be readily available, complete or accurate. ESG factors may vary across types of investments and issuers, and not every ESG factor may be identified or evaluated. There is no guarantee that the evaluation of ESG considerations will be additive to the fund’s performance. 

    Issued in Australia by Invesco Australia Limited (ABN 48 001 693 232), Level 26, 333 Collins Street, Melbourne, Victoria, 3000, Australia which holds an Australian Financial Services Licence number 239916.