Quantitative Equity: Low Carbon and Low Volatility

Published: 09/11/2021

Investor Knowledge +
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New Thinking

Headline environmental incidents like uncontainable wildfires and melting polar ice caps are reminders of the challenges posed by climate change and highlight the societal need to transition to a low carbon economy. As new environmental, social and financial risks arise from climate change, climate-aware institutional investors have increasingly been taking steps to lower their exposures to fossil fuels and CO2 emissions in order to mitigate carbon-related risks and better position themselves for a low-carbon future.

In this article, TDAM's Quantitative Equity Team will try to align low volatility investing and low carbon objectives. More specifically, we will examine whether a Low Volatility investment strategy can have minimal industrial and sectoral carbon exposure, without compromising its defensive qualities and investment performance.

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