Scientific Portfolio (an EDHEC Venture)

A VENTURE EMBEDDED IN EDHEC'S FINANCIAL ECOSYSTEM

Scientific Portfolio (an EDHEC Venture) aims to bridge the gap between academic finance and the investment management industry, in line with EDHEC's impactful academic heritage and entrepreneurial approach.

 

At EDHEC, finance is a focal point. Over two decades, EDHEC-Risk Institute (ERI) has produced world-class academic research and collaborated with industry leaders on initiatives addressing aging populations, digital shifts, and climate challenges. Its transform into EDHEC-Risk Climate Impact Institute in 2022, backed by a €20 million budget, showcases EDHEC’s leadership in the field.

In recent years, this ecosystem has facilitated the launch of numerous applied scientific startups. The most recent among them is Scientific Infra & Private Assets, which serves investors managing private equity and infrastructure assets.

 

The EDHEC ecosystem has also incubated Scientific Portfolio (an EDHEC Venture), inspired by the success of the previous startups, and based on the observation that research, technology and pedagogy are needed to:

- address the growing demand for customized climate and sustainable investing;

- and design a coherent framework that supports the pursuit of both financial and extra-financial investment objectives.

 

• To learn more about Scientific Portfolio (an EDHEC Venture): please visit their website at https://scientificportfolio.com/

INVESTMENT PHILOSOPHY

Scientific Portfolio's portfolio analysis and construction philosophy is rooted in academically validated principles of factor investing and integrating finance and sustainability within an intuitive framework.

In that sense, its investment philosophy is comprised of three pillars:

Finance

The financial pillar promotes looking beyond securities allocation to examine systematic factor exposures and favors rewarded sources of risk that are expected to generate excess returns in the long term while controlling or diversifying away unrewarded ones.

 

Sustainability

The sustainability pillar is based on the concept that sustainability begins with "doing no harm" and is implemented in alignment with the United Nations' 17 Sustainable Development Goals (SDGs).

 

Put Together

The third pillar brings the first two pillars together, first acknowledging that risk originating from ESG sources is yet another financial risk and should be integrated into the existing risk framework. Additionally, ESG and financial considerations can be combined once priorities are established, with one acting as the objective and the other acting as the constraint.

 

VIDEO PRESENTATION

 

SCIENTIFIC PORTFOLIO (AN EDHEC VENTURE) RESEARCH CONTRIBUTORS

 

• Benjamin Herzog - Chief Executive Officer (CEO)

 

ESG Research Team

• Vincent Bouchet – ESG Director
• Thomas Lorans – Deputy Head of ESG Research
• Aurore Porteu de La Morandière – ESG Researcher
• Julien Priol – ESG Researcher

 

Finance Research Team

• Matteo Bagnara – Quantitative Researcher
• Benoit Vaucher – Head of Research

 

Business Development

• Jenna Jones – Senior Product Specialist
• Shahyar Safaee – Deputy CEO and Business Development Director

PUBLICATIONS

 

Do Climate-Related Exclusions Have an Effect on Portfolio Risk and Diversification? A Contribution to the Article 9 Funds Controversy

May 2024, Scientific Portfolio Publication - V. Bouchet, A. Porteu de La Morandière, B. Vaucher

Despite regulatory efforts to enhance consistency, the increase in funds claiming to be sustainable has led to polemics about some of the funds’ stock holdings having a negative impact on climate change...

• Read the reference paper
• Read the associated EDHEC Vox - “Dark green” equity funds could go “full green” with very limited impact on their risk profile

 

Institutional Equity Portfolios: How Can Asset Owners Build Coherent Sustainable Strategies?

March 2024, The Journal of Impact and ESG Investing (forthcoming) - V. Bouchet, S. Safaee

The number of equity funds claiming to be sustainable continues to grow, as well as the regulatory transparency requirements they face. Despite this trend, sustainable finance is facing a double “identity crisis”...

• Read this paper

 

Decomposition of Greenhouse Gas Emissions Associated With an Equity Portfolio

October 2023, The Journal of Impact and ESG Investing - V. Bouchet

While methodologies to measure the alignment of a financial portfolio with climate objectives develop rapidly, historical and cross-sectional analysis of greenhouse gas emissions associated with a portfolio has received little attention...

• Read this paper

 

Look Up! A Market-measure of the Long-term Transition Risks in Equity Portfolios

October 2023, The Journal of Impact and ESG Investing - V. Bouchet, B. Herzog, B. Vaucher

The transition to a low-carbon economy generates new regulatory, technological, market and reputational risks for the financial sector. These climate-transition risks are mainly analyzed by portfolio managers through bottom-up fundamental approaches...

• Read this paper

 

The Perceived Advantages of Self-Indexing for Institutional Equity Investors

July 2023, The Journal of Beta Investment Strategies - B. Herzog, J. Jones, S. Safaee

Institutional asset owners increasingly seek to customize index-linked strategies in order to take their ESG and climate preferences into consideration. This trend away from cap-weighted benchmarks does, however, bring forth challenges for asset owners...

• Read this paper

 

Remember to Diversify Your Active Risk: Evidence from US Equity ETFs

March 2023, The Journal of Beta Investment Strategies - B. Herzog, J. Jones, S. Safaee

In this article, the authors estimate the level of risk diversification for a universe of US equity ETFs and observe the benefits of diversification for budgeting of active risk relative to a cap-weighted benchmark...

• Read this paper