ESG

Environmental, Social, Governance

McKinley Capital Management, LLC’s (“McKinley Capital”) goal is to improve risk-adjusted performance for our clients. As a systematic manager, McKinley Capital looks for, tests and validates statistically significant sources of alpha. Environmental, Social, Governance (“ESG”) considerations afford our firm the ability to identify new sources of alpha, align investment practices with clients’ investing views, and broaden the impact of our work beyond the realm of exclusively financial returns.

Using a disciplined, quantitatively driven investment process permits McKinley Capital to produce products that aim for outperformance, yet are also customizable to meet individual client needs. As such, McKinley Capital incorporates ESG factors into its investment process in three main ways:

Testing and assessment of ESG factors as potential sources of alpha.

McKinley Capital is committed to a robust applied quantitative research agenda regarding ESG. The Moskowitz Prize is a global award which recognizes outstanding academic research on ESG topics in the investment field.  Our quantitative team is headed by a Moskowitz Prize winner, who has earned significant recognition in the field of socially responsible investing.

To date, McKinley Capital has identified several promising areas of study in ESG, especially within the Governance arena. Typically, Environmental and Social factors are proxy for sector bets, which can lead to increased relative risk. Within Governance, however, we have found attractive sources of alpha which complement our overall investment process, and we apply those in our portfolios.

Our assessment of ESG variables is continuous. We collaborate with several data providers as well as revisit older sources as they develop additional granularity. For example, we are currently partnering with the Wharton School at the University of Pennsylvania on research relating to a long-term and robust study of ESG.

Select use of exclusionary screens.

McKinley Capital has the capacity to meet clients’ different ESG needs as well as specific requirements, and has a robust procedure to implement client guidelines in our investment process.  In addition, McKinley Capital has extensive experience in investing through the application of exclusionary screens. Our experience ranges the continuum — from identifying and removing stocks related to various issues to the creation of complex, custom environmental portfolios.

Maximizing the impact of proxy voting rights.

To further advance its responsible investing footprint, McKinley Capital offers its investors the option to leverage either (i) a corporate governance-centered voting policy or (ii) a sustainability-centered voting policy. Both these policies were developed with a leading ESG service provider. McKinley Capital’s corporate governance-centered policy is custom-developed, and promotes long-term shareholder value and risk mitigation through responsible corporate governance requirements.

In addition to considering the preservation and enhancement of shareholder value, McKinley Capital’s sustainability-based proxy voting policy promotes support for sustainable business practices advocating stewardship of environment, fair labor practices, non‐discrimination, and the protection of human rights.As an active systematic investment adviser, McKinley Capital is committed to responsible investment. Through this commitment, we seek to have a positive impact on the world, and the communities in which we live and work. We believe that our systematic investment process is adept at the customization and optimization of the risk/return relationship, including the incorporation of ESG considerations.

Select use of exclusionary screens.

McKinley Capital has the capacity to meet clients’ different ESG needs as well as specific requirements, and has a robust procedure to implement client guidelines in our investment process.  In addition, McKinley Capital has extensive experience in investing through the application of exclusionary screens. Our experience ranges the continuum — from identifying and removing stocks related to various issues to the creation of complex, custom environmental portfolios.

As an active systematic investment adviser, McKinley Capital is committed to responsible investment. Through this commitment, we seek to have a positive impact on the world, and the communities in which we live and work. We believe that our systematic investment process is adept at the customization and optimization of the risk/return relationship, including the incorporation of ESG considerations.