How it Works

Aperio’s Socially Responsive Indexing strategy replicates a chosen equity index while adhering to a set of personal or institutional values. The critical first step is evaluating and understanding the investor’s beliefs.

Aperio employs a rigorous system to help codify each investor’s social beliefs across a range of values. We begin the discussion with a detailed questionnaire that is informed by leading social research databases. The review process identifies the raw material of SRI opinions that distinguish one client from another. These views are then converted into a quantitative template for building and managing a portfolio that expresses a distinctive social agenda while tracking the target benchmark.

We offer various levels of SRI customization from common existing SRI products to fully customized applications that feature a high-level of specificity for targeting environmental, social, religious, governance, and/or other factors.

Clients select from a range of standard domestic and international benchmarks such as the Russell 3000 or MSCI ACWI. We then implement the strategy in a separately managed account (SMA) and use a portfolio optimizer to weight the allowable stocks to closely track the chosen index. Ultimately, clients control the extent of the fundamental tradeoff in the portfolio design: maximizing SRI goals vs. minimizing index tracking error.

This SMA structure permits Aperio to vote proxies for stocks in accordance with each client’s SRI objectives. We also update SRI scores on individual companies and rebalance the portfolio to maintain the specified social mandate over time. Investors can also add Aperio’s Active Tax Indexing  and/or Thematic Beta  overlays to further customize their porfolio’s exposures and performance.

What kind of investor?

Activist investor? We vote proxies according to a socially responsible proxy policy. Taxable investor? We can offer the added benefit of higher after-tax returns through tax-loss harvesting.

A Clear Advantage

Our transparent approach and screening system uses rigorous analytics to construct a portfolio that tracks to a standard equity benchmark. No mystery, no guesswork.

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