According to Bloomberg Business, the A$1.9 billion RQI Australian Value Fund is beating the market by treating ESG factors as indicators of corporate efficiency and profitability. Senior quant portfolio manager Joanna Nash revealed the fund uses metrics like corporate culture and climate impact in its stock selection process. The quantitative fund from RQI Investors, which is the quant arm of First Sentier Investors, has outperformed its benchmark across multiple time periods. The strategy treats environmental, social and governance credentials as proxies for operational efficiency rather than just ethical considerations.
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The Quant ESG Edge
Here’s what’s interesting about this approach – they’re not just doing ESG for ESG’s sake. They’re basically using sustainability metrics as a way to identify companies that are better run. Think about it: a company with strong climate policies probably has better risk management. One with good corporate culture likely has lower turnover and higher productivity. So they’re treating these ESG factors as leading indicators of operational excellence.
And it’s working. The fund has been outperforming across multiple time horizons, which suggests this isn’t just a lucky streak. When you’re managing A$1.9 billion, you can’t just stumble into consistent outperformance. The strategy seems to be uncovering something real about how well-managed companies operate.
What This Means for Investing
This could be a game-changer for how we think about ESG investing. For years, there’s been this debate about whether you have to sacrifice returns to invest responsibly. But what if the opposite is true? What if the most sustainable companies are actually the most profitable in the long run?
The RQI approach treats ESG factors as business fundamentals rather than ethical preferences. They’re part of RQI Investors’ quantitative toolkit, analyzed alongside traditional financial metrics. It’s a data-driven way to identify companies that are simply better at managing their operations, their people, and their environmental impact.
Now, the big question is whether this approach can scale or if it works specifically in the Australian market. But given that First Sentier Investors is backing this strategy through their quant arm, they clearly see broader potential. This could signal a shift where ESG stops being a separate category and just becomes part of smart fundamental analysis.
