US - Barclays Global Investors has launched index strategies to help US pension funds to comply with new rules requiring them to divest of companies with ties to Sudan.
“The new strategies are designed to track well-known U.S. and international equity benchmarks,” it said. “BGI is also offering investment solutions to plan sponsors who may require customized portfolios to meet the divestiture legislation.”
It’s also exploring developing fixed income strategies to would exclude bonds of companies that do business in Sudan.
"Pension plan sponsors that are impacted have the dual responsibility of complying with the new divestiture legislation and fulfilling their investment objectives," said Matthew Scanlan, head of BGI's Americas institutional business.
"As a large quantitative manager, who has been serving pension plans for over 30 years, BGI can help plan sponsors by providing the newly created Sudan-free strategies or customizing portfolios to suit specific needs."
Illinois recently passed a law that orders state public pension funds to divest holdings of companies that do business in Sudan by July 26. Similar laws have been passed in New Jersey and Oregon, and others have been proposed for California, Connecticut, Indiana, Missouri, Washington, New York, and Ohio, among others.
The new BGI strategies will screen out stocks of companies that have been identified as having business ties to Sudan, while at the same time tracking as closely as possible the return and risk characteristics of the major US and international stock indexes.
BGI will rely on an independent research firm to identify companies doing business in Sudan and will use its quantitative portfolio construction techniques to seek to minimize the tracking variance that will occur with the deletion of stocks.