STOXX and Osmosis Launch 48 Sustainability-Integrated Factor Indices

STOXX and Osmosis Investment Management have launched a new family of 48 indices designed to combine traditional factor investing with sustainability-related signals. The iSTOXX Osmosis Multi Factor Transition Indices are built on STOXX Investable Market Indices and include single-factor, multi-factor and sustainability-integrated strategies aimed at institutional investors.

The methodology incorporates Osmosis’ proprietary Resource Efficiency signal directly into portfolio construction rather than applying sustainability as a separate screen. The signal assesses how efficiently companies generate economic value relative to their use of carbon, water and waste, while the wider framework also updates conventional investment factors including Value, Quality, Momentum and Low Volatility.

 

Read more: Temasek Trust, World Bank Group Partner to Mobilise Capital for Climate, Water and Health

 

Value is adjusted to reflect research and development and intangible investment, while Quality focuses on durable profitability and earnings quality. Momentum is assessed through a risk-managed approach, and Low Volatility is focused on downside risk. Investors can access individual factor exposures or combine them within broader multi-factor strategies.

"We are delighted to collaborate with Osmosis to bring its proprietary factor and sustainability research into the iSTOXX framework," said Axel Lomholt, General Manager at STOXX. "Together we have created a broad and flexible index family built on STOXX Investable Market Indices, that translates this research into a practical range of solutions for institutional investors."

 

Explore OneStop ESG Marketplace: ESG data, ratings & investing

 

"The foundations of factor investing were established decades ago. We believe the next generation needs to reflect how companies create value today, while recognising the growing financial importance of sustainability-related risks and opportunities," said Dr Fadi Zaher, Chief Investment Officer at Osmosis. The launch expands STOXX’s custom and rules-based index offering while giving investors another way to integrate sustainability-related financial signals into systematic equity strategies.

 

Source: Stoxx