How Are ESG Funds Managed?

There are a variety of styles in which environmental, social and governance (ESG) funds are managed.   As with classic fund investing, the typical ESG fund manager will consider traditional investment metrics incorporating factors such as valuation, growth, earnings and balance sheet health.  In addition to these financial metrics, the manager will incorporate an array of ESG metrics into the investment process, analyzing factors that include:

Environmental: pollution, consumption and disclosure 

Social: tobacco, labor practices, gambling, pornography, weapons 

Governance: board independence, CEO compensation, auditing processes 

Faith-based: abortion, contraception, alcohol

At Dana, we manage our ESG portfolios with the comprehensive, balanced and thoughtful investment approach in which we manage our strategies, incorporating ESG factor analysis into our uniform process that attempts to minimize volatility and improve return consistency.

Comprehensive: our proprietary quantitative ESG model utilizes thousands of underlying data points from multiple research vendors to rank approximately 3,000 U.S. stocks 

Balanced: an ESG rank is calculated for each stock by weighting the factors using a geometric mean that identifies companies with favorable attributes 

Thoughtful: ESG criteria are integrated into Dana’s traditional fundamental stock selection representation, resulting in positive, best-in-class representation 

Advocacy is an important part of Dana’s ESG portfolio management process.  At Dana, we stay active after the stock selection process, communicating with companies regarding best practices in corporate responsibility and accountability.  We also adhere to prescribed ESG proxy voting guidelines. 

Interested in learning more about ESG?  Download our Free Guidebook below.
Everything You Want To Know About ESG Investing


NOTE: This is the second of a three-part blog series on ESG investing. Come back for Part 3 on why you should consider investing in ESG or sign up here to be notified when our insights are released.

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