CalPERS Invests $150 Million into Quotient for Sustainable Large-Cap Investing through ESG Screens: an Interview with Andre Bertolotti, Managing Partner and Chief Investment Officer

Wall Street Transcript

67 WALL STREET, New York - September 29, 2012 - The Wall Street Transcript has just published its Investing in Energy and Other Strategies Report. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Investing in Energy - North American Shale Development - Investing in Technology - Oil and Gas - E&P - Value Investing

Companies include: Quotient Investors

In the following excerpt from the Investing in Energy and Other Strategies Report, an experienced ESG portfolio manager discusses his investment methodology:

TWST: Please start by telling us a little bit about Quotient Investors.

Mr. Bertolotti: Basically, we are a firm that was founded four and a half years ago, as part of the CalPERS Management Development Program II, and we were seeded with $150 million through two funds from CalPERS. We are set up as an U.S. institutional equity manager with three partners - myself; Julia Peter-Kerr, who is in charge of sales and marketing; and William Yost, who is in charge of portfolio management and trading. We are located here in New York.

We now have grown to over $300 million, and we have several clients. We have grown with a strategy that I'm hoping to speak with you about today, which is our sustainable investment large-cap strategy. We are really pleased to have CalPERS as a partner. They have been terrific supporters and a great partner during these very testing times. So although we launched at a very difficult time in terms of the market and the economy, we are very well positioned today.

TWST: Quotient Investors has three strategies, the large cap, the small cap, and then the ESG strategy. Why is this a good time to invest in ESG, and what makes it attractive?

Mr. Bertolotti: There are a number of reasons ESG investing is attractive. I think the real beginning of this has been the United Nations initiative in April 2006 to bring together the world's largest asset owners, which includes CalPERS, CalSTRS, New York City ERS and many other U.S. investors, but also global investors, to launch these Principles for Responsible Investment, which are guidelines that help owners become more aware of their holdings and more discerning in exactly how they invest and where they invest.

Additionally, CalPERS directed us to look at ESG without any firm mandate, but encouraged us to think about ESG. The research that I did in 2008 and 2009 suggested that for us ESG would be a very good fit to how we invest. I must say, I think a lot of asset owners are continuing their commitment and their support for what ESG is trying to do. So there is certainly that interest. For our part, so for the manager part, we have seen ESG as a very persuasive and strong focus for investing, where we can actually obtain good returns.

Now is a good time to invest in ESG since a lot of different things have come together. It's been a difficult environment for a lot of managers picking U.S. stocks. The interest from traditional investors is continuing, and our performance has been good. So for our part, we're very bullish about sustainable investing and ESG. We are certainly promoting that strategy in the U.S. to people who care about ESG, and we are also promoting it to people who are not so interested. If you care about ESG, we'll tell you about it, but if you're not interested in ESG specifically, we talk to you about risk and return.

TWST: What does "sustainable" mean to you?

For more from this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers, and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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