Scientific Beta

Financial News: "Enter the French business school EDHEC, whose commercial arm, Scientific Beta, designs and licenses indices of its own. Wading into the debate on February 21, EDHEC made a striking claim: cutting out the bomb makers is not a big deal at all. Noël Amenc, professor of finance and associate dean for business development, estimates that the effect of doing this would be significantly less than the regular, workaday adjustments MSCI et al already make to their benchmarks."

Financial News 27/02/2019

"(...) On January 31, Switzerland’s sustainable finance association wrote to the world’s major index providers, MSCI, FTSE Russell and S&P Dow Jones, calling on them to drop the makers of particularly controversial weapons – cluster bombs, landmines and nuclear arms – from their mainstream indices. (...) Unsurprisingly, the index-providers said “no”, pointing out they already run ethical versions of their indices for those that want them. MSCI’s response summed up the others’: “We believe market cap-weighted global investable benchmarks should aim to represent the broadest investment opportunity set available to international institutional investors.” Enter the French business school EDHEC, whose commercial arm, Scientific Beta, designs and licenses indices of its own. Wading into the debate on February 21, EDHEC made a striking claim: cutting out the bomb makers is not a big deal at all. Noël Amenc, professor of finance and associate dean for business development, estimates that the effect of doing this would be significantly less than the regular, workaday adjustments MSCI et al already make to their benchmarks. (...) According to Amenc: “I had a little study done on the respective impact of exclusions relating to a standard liquidity filter... the figures are as I expected. On average, the liquidity filter corresponds to exclusions representing 0.71% of the universe, compared to 0.49% for the exclusions for controversial weapons.” In other words, even if arms manufacturers were the top-performing stocks, since they are such a small part of the market, they are not likely to make much difference to your returns anyway. (...)"