Investment Product and Service Launches

NTAM announces new ESG score; Vanguard expands access to private equity; and MSCI builds private infrastructure modeling service.

NTAM Announces New ESG Score 

Northern Trust Asset Management (NTAM) has introduced the Northern Trust ESG Vector Score, a measurement that assesses publicly traded companies in the context of financially relevant environmental, social and governance (ESG)-related criteria that could impact their operating performances.

It can be used in constructing and managing investment portfolios and stewardship activities.

The ESG Vector Score focuses on the magnitude and direction of key ESG-related business issues likely to have a financial impact on companies and a portfolio’s performance. It provides a methodology to gain greater clarity when building and managing sustainable portfolios.

“The score aligns with the firm’s philosophy that investors should be compensated for the risks they take—in all market environments and any investment strategy,” NTAM president Shundrawn Thomas says. “We consider this an essential tool to measure how a company is managing its ESG business risks.”

NTAM’s approach marries two sustainability disclosure standards and frameworks—the Sustainability Accounting Standards Board (SASB)’s standards, which are industry-specific sustainability disclosure standards focused on financial materiality, and the Task Force on Climate-related Financial Disclosures (TCFD)’s recommendations. NTAM says the design enables more purposeful and transparent integration of ESG considerations into investment processes, addressing the need for a consistent way to measure and report on ESG investments. 

The firm’s recently launched exchange-traded funds (ETFs) in Europe, the Middle East and Africa (EMEA) incorporate the ESG Vector Score. Further, it plans on integrating the score into new equity and fixed-income ESG investment strategies it is building.

“A full multi-asset suite of products with a consistent sustainability methodology across asset classes is a current gap in the marketplace. The score marks an important foundational step in filling it,” says NTAM head of global product Sheri Hawkins.

Hawkins further explains that “NTAM plans on using the ESG Vector Score to assist in prioritizing its corporate engagement, thus further aligning our sustainable investment platform and stewardship. This allows us to lead more deliberate engagements, as well as track progress over time with a consistent metric.”

Vanguard Expands Access to Private Equity 

Vanguard has announced plans to broaden access to private equity. 

 The company entered the private equity market last year with an initial focus on institutional advised clients, including pensions, endowments and foundations. In continued partnership with HarbourVest, Vanguard will provide qualified individual investors with access to private equity this summer.

“Private equity has the potential to improve long-term investment outcomes of a broadly diversified portfolio,” says Vanguard CEO Tim Buckley. “Over time, we will expand access to this asset class, which has traditionally been reserved for the wealthiest investors, to the many qualified investors at Vanguard.” 

Vanguard is taking a structured approach to opening private equity access to individual investors. Eligibility requirements include certification as a qualified purchaser and accredited investor. The strategy will initially be available to eligible non-advised Vanguard clients and is expected to be made available to eligible advised clients of Vanguard Personal Advisor Services in the near future.  

“We look forward to providing our qualified individual investors access to our partnership with HarbourVest, one of the industry’s premier private equity providers,” says Matt Benchener, managing director of Vanguard Retail Investor Group. “Our extensive private equity research suggests that investors who can access high-quality, broadly diversified strategies with top private equity managers can potentially realize significant financial benefits over long time horizons.” 

MSCI Builds Private Infrastructure Modeling Service

MSCI has launched its private infrastructure modeling service to profile the risk of complex private infrastructure holdings and provide data-driven insights to inform investment decisions.

The Private Infrastructure Modelling Service is a response to growing investor demand for private assets. Built using private infrastructure data provided by The Burgiss Group and MSCI Real Estate, the service is designed to give investors tools to further expand their private asset portfolios and benefit from the return and diversification potential of private infrastructure investment opportunities.

The firm says the launch reinforces MSCI’s commitment to provide investors with industry-leading knowledge and insight, and builds on its strategic partnership with Burgiss, a market-leading provider of data, analytics and technology solutions for investors of private capital, announced in January 2020. 

“The private asset class has emerged as a critical component in the construction of long-term portfolios,” says Jorge Mina, head of analytics at MSCI. “Today, investors are looking at private assets differently, expanding and shifting the role the investments play within a multi-asset class portfolio. While capital inflows to private assets have increased incrementally, investor appetite and confidence has been restricted by a lack of transparency and data. At MSCI, we’re committed to powering better investment decisions and we view this modeling service as a crucial milestone driving the next wave of investor demand for private assets.

“Today’s announcement signals the strength of MSCI’s and Burgiss’ partnership and displays how our cross-sector expertise can be utilized to provide industry-leading solutions,” says Jay McNamara, president at Burgiss. “Burgiss’ data and solutions allow investors to drill down at a granular level into the performance and exposures of private capital portfolios across asset classes, including infrastructure. This launch forms the first part of wider plans to bring enhanced transparency to private markets and create an investment experience that mirrors public markets. We are committed to meeting client demands and look forward to expanding our product portfolio to encompass additional asset verticals in future.”