It’s probably safe to say that every financial professional and investor today is aware of exchange-traded funds (ETFs)1. What they might not know is that ETF strategies have the capacity to implement a sustainable investing philosophy, often referred to Environmental, Social, Governance (ESG)2 investing. I recently spoke about these two approaches with Frédéric Babu, CEO of Ostrum Asset Management U.S. and Senior Portfolio Manager at Seeyond.3 The Natixis Seeyond International Minimum Volatility ETF (MVIN)4 is among the ETF strategies available on the market that adheres to ESG criteria.

Fred, before we discuss Environmental, Social and Governance (ESG) in your investments, can you talk about the relationship between Ostrum Asset Management and Seeyond?

Babu: Ostrum is Seeyond’s parent company. Seeyond was initially an investment department within Ostrum, but it was formally spun out as its own named entity in 2018. Seeyond still benefits from many back office services provided by Ostrum through various service agreements.

Tell me about Seeyond and Ostrum’s focus on ESG investing in its investments.

Babu: Ostrum has been involved in issues of sustainable development, ESG, and Socially Responsible Investing (SRI) for close to 30 years. The company decided a few years ago to take the next step by designing a framework for responsible asset management for application to the entirety of its investment processes.

How does the ESG investment framework work?

Babu: The goal is to encourage greater attention to extra-financial criteria in the process of making investment decisions across the board. This keeps up with the recommendations of widely recognized international standards such as the United Nations’ Principles for Responsible Investment (UNPRI), of which Ostrum has been a signatory since 2008.

What are the kinds of companies that Seeyond and the Natixis Seeyond International Minimum Volatility ETF (MVIN) avoids?

Babu: MVIN systematically excludes companies based on our exclusion criteria. These criteria include controversial weapons, coal, pollution, and blacklisted countries. As you may recall, MVIN is an actively managed ETF strategy that is specifically designed to seek outperformance over the long term while reducing volatility. Therefore, ESG filters arguably make even more sense for a strategy like MVIN in a world where non-financial headline news is becoming a significant source of stock specific volatility.

 


 

1 An exchange-traded fund, or ETF, is a marketable security that tracks an index, commodity, bonds, or a basket of assets like an index fund. ETFs trade like common stock on a stock exchange and experience price fluctuations throughout the day as they are bought and sold.

2 Environmental, social and governance (ESG) investing focuses on investments in companies that demonstrate adherence to environmental, social and governance (ESG) practices, therefore the universe of investments may be reduced. An ESG strategy may sell a security when it could be disadvantageous to do so or forgo opportunities in certain companies, industries, sectors or countries. This could have a negative impact on performance depending on whether such investments are in or out of favor.

3 Seeyond is a subsidiary of Ostrum Asset Management. Operated in the US through Ostrum Asset Management U.S., LLC. Ostrum Asset Management U.S., LLC. and Natixis Distribution, L.P. are indirect subsidiaries of Natixis Investment Managers.

4 Seeyond sub-advises the Natixis Seeyond Minimum Volatility ETF - MVIN. Seeyond is an affiliate of Natixis Investment Managers dedicated to Active Quantitative strategies.

The Fund seeks long-term capital appreciation with less volatility than typically experienced by international equity markets.

Exchange-traded funds (ETFs) trade like stocks, are subject to investment risk, and will fluctuate in market value. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than the ETF's net asset value. Transactions in shares of ETFs will result in brokerage commissions, which will reduce returns. Unlike typical exchange-traded funds, there are no indexes that the Fund attempts to track or replicate. Thus, the ability of the Fund to achieve its objectives will depend on the effectiveness of the portfolio manager. There is no assurance that the investment process will consistently lead to successful investing. Volatility management techniques may result in periods of loss and underperformance, may limit the Fund's ability to participate in rising markets and may increase transaction costs. Equity securities are volatile and can decline significantly in response to broad market and economic conditions. Foreign securities may involve heightened risk due to currency fluctuations. Additionally, they may be subject to greater political, economic, environmental, credit, and information risks. Foreign securities may be subject to higher volatility than US securities, due to varying degrees of regulation and limited liquidity. Currency exchange rates between the US dollar and foreign currencies may cause the value of the fund’s investments to decline.

Sustainable investing focuses on investments in companies that relate to certain sustainable development themes and adherence to environmental, social and governance (ESG) practices, therefore the Fund’s universe of investments may be reduced. It may sell a security when it could be disadvantageous to do so or forgo opportunities in certain companies, industries, sectors or countries. This could have a negative impact on performance depending on whether such investments are in or out of favor.

ESG investing focuses on investments in companies that demonstrate adherence to environmental, social and governance (ESG) practices, therefore the universe of investments may be reduced. An ESG strategy may sell a security when it could be disadvantageous to do so or forgo opportunities in certain companies, industries, sectors or countries. This could have a negative impact on performance depending on whether such investments are in or out of favor.

All investing involves risk, including the risk of loss.

This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed above may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted.

Before investing, consider the fund's investment objectives, risk, charges, and expenses. Visit im.natixis.com for a prospectus or a summary prospectus containing this and other information. Read it carefully.

ALPS Distributors, Inc. is the distributor for the Natixis Seeyond International Minimum Volatility ETF. Natixis Distribution, L.P. is a marketing agent. ALPS Distributors, Inc. is not affiliated with Natixis Distribution, L.P.

Seeyond is operated in the US through Natixis Asset Management U.S., LLC.

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