Forefront Impact Resiliency Strategy (FFIRS) Celebrates Fifth Anniversary

WEST CONSHOHOCKEN, Pa., March 30, 2021 /PRNewswire/ -- The Forefront Impact Resiliency Strategy (FFIRS), at the beginning of 2021, marked five years since strategy inception. The investment solution is designed to provide investors concerned about social impact and Environmental, Social and Governance (ESG) issues with a tool to help navigate turbulent markets. The strategy was introduced five years ago through a collaboration with a large family office seeking to target diversifying allocations to traditional stocks and bonds while aligning with its clients' sustainable investment goals.  

The Forefront Impact Resiliency Strategy reinforces the belief that impact investors may not need to sacrifice compelling risk-adjusted market returns, and it enables investors to align their portfolios with their desire to support positive environmental and social change. By targeting investments pursuing positive sustainability themes consistent with the UN's Sustainable Development Goals (SDGs) along with aiming to achieve diversifying returns, the Resiliency Strategy attempts to align with the triple bottom-line outcomes so dear to impact investors. As of 11/30/2020, there were 59 companies in FFIRS reporting UN SDG alignment (Source: Refinitiv).

More About the Forefront Impact Resiliency Strategy

As of 12/31/2020, the strategy had approximately $178 million in assets across a number of custodial relationships. According to Nancy Gao, co-portfolio manager of this strategy, "The Strategy is constructed based on Forefront's proprietary factors and optimization techniques. The underlying investments are also examined according to their impact characteristics. Thus, the Strategy attempts simultaneously to capture long-term factor premia, their important dynamics, and support tangible ESG impact. Its dynamic allocation and rebalancing approach target lower correlation to the broad market in the long run."

Value Proposition

• Support impact on a variety of environmental, social, and governance issues, including shareholder activism and social impact.
• Provide a potential substitute for alternative / hedge fund exposure in a client total portfolio pursuing ESG alignment which seeks liquidity that's generally not seen in private fund (LP)-oriented alternative investments thereby targeting total portfolio impact activation with a more liquid profile.
• Powered by models of dynamic exposure to multiple market factors (e.g. growth, value, momentum, etc.) expressed in ESG investments including pooled mutual funds and ETFs with the objective of improved diversification.

Impact Outcomes (as of 12/31/2020)*

Since inception¹ the strategy's underlying strategies had favorable environmental, social and governance impacts.  For example, relative to its equity sleeve benchmark:

• Emissions. The magnitude of emissions reduced is equivalent to:
• 3.13 billion gallons of gas unburned
• everyone in the United States completely abstaining from use of gasoline for 8 days
• 70.4 million miles avoided by the average passenger vehicle
• 473 million urban trees planted
• Water. The amount of water saved is the same amount as 11.6 million people's ordinary use of water for a year.
• Waste. The amount of hazard wasted reduced is equivalent to the amount generated in a year for 28.3 million people.
• Gender Diversity: In 43% of FFIRS's equity holdings, at least 1/5 of the executive members are female, which is 29% higher than the benchmark.
• Cultural Diversity: In all of FFIRS's equity holdings, more than 10% of the executive members come from a diverse cultural background, 31% higher than the benchmark.
• Gender Equality: 48% of the FFIRS's equity holdings have no pay difference between male and female employees, which is 20% higher than the benchmark.
• Resolutions: Underlying funds have cumulatively conducted 2,970 corporate engagements on issues of social responsibility.
• Salary Gap: Salary gap of FFIRS's equity holdings is 62% smaller than the benchmark.

Can be utilized in a number of ways:

• An ESG allocation in the alternatives / hedge fund category targeting "total portfolio impact/ESG activation."
• A stand-alone volatility managed, factor oriented ESG portfolio.
• A broad ESG solution covering a number of Impact themes at the same time.

Forefront and Impact Investing

Forefront Analytics is led by founder Christopher Geczy, Ph.D. In addition to his work at Forefront, Dr. Geczy also serves on the faculty in the Finance Department at The Wharton School and as Academic Director of Wharton's Jacobs Levy Equity Management Center for Quantitative Financial Research and the Wharton Wealth Management Initiative.

"Our early academic research on impact investing concluded that some of the biggest investment challenges faced by mission-oriented investors were limitations on diversification provided by what was available in the marketplace," said Dr. Geczy. "We believe the Impact Resiliency Strategy addresses those challenges and helps impact investors achieve a double bottom line goal of impact and investment diversification."

Dr. Geczy and several of his academic colleagues were awarded the 2018 Investment for Impact Award from the University of California Berkeley Center for Responsible Business for their paper "Contracts with Benefits: The implementation of Impact investing," forthcoming in the Journal of Financial Economics. "We started our project to confront a common skepticism about impact investing being greenwashing—a repackaging of a traditional investment opportunity without substantive changes," said the authors. https://redefiningbusiness.org/winners-2018-investment-impact-research-prize/

Dr. Geczy's paper with John B. Guerard and Mikhail Samonov, "Warning: SRI Need Not Kill Your Sharpe and Information Ratios—Forecasting of Earnings and Efficient SRI and ESG Portfolios," was published last year in the ESG Special Issue of The Journal of Investing.

About Forefront Analytics, LLC

Forefront Analytics, LLC, West Conshohocken, PA, an SEC Registered Investment Adviser, is a quantitative investment management firm with experience in impact/mission/ESG investment strategies. One of the firm's key beliefs is that investors may benefit from diversifying their risk beyond traditional stocks and bonds and into "factors" which drive investment performance.

Contact:
Keith Holland
[email protected]

The information provided herein is for information purposes only and does not constitute financial, investment, tax, or legal advice and it is not to be considered a recommendation to participate in any particular trading strategy, or deemed to be an offer or sale of any investment product, and it should not be relied as such. All investments are subject to risks. Past performance is not an indicator of future results.

Additional information about Forefront can be found in the Firm's Form ADV disclosure reports, the most recent versions of which can be found on the SEC's Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov.

¹ Source: Forefront Analytics, impact reports, and prospectuses from invested fund managers
*Data are summarized cumulatively since FFIRS inception based on the impact made by underlying investments during the period they were held under FFIRS. Update of the impact is subject to releases of the impact reports from underlying funds, thus there might be lags, estimates or inaccuracies.

SOURCE Forefront Analytics, LLC

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