Arabesque, the world’s first “ESG quant fund,” is the story of professors, from universities such as Harvard and Oxford, and professionals from finance, mathematics, and sustainability ESG, working together to develop the next generation in asset management. Our technology integrates environmental, social, and governance (ESG) data with quantitative investment strategies. The word “Arabesque” describes geometric art built with mathematical equations. At Arabesque, we use patterns to organize an investment universe of 1,000 global stocks into a combination that delivers a superior risk-return profile, using fundamental, quantitative, forensic, financial, and nonfinancial data.
What defines us is not just the technology we use, but also how we express our commitment to sustainability through our choice of instruments. We refrain from any derivatives, securities lending, shorting, or leverage, while still outperforming 95 percent of our conventional peer group. In short, our performance engine is to the finance industry what Tesla is to the car industry – a clean and new type of transportation.
Starting Arabesque was not a question of timing, but simple logic, once we found a way to use nonfinancial information to generate outperformance. The investment proposition turned from “Why invest sustainably?” to “Why not invest sustainably if one could achieve better returns?”