Frequently Asked Questions
What is the KLD Asia Pacific Sustainability Index?
What universe does the Index utilize?
How is the Index constructed?
How is the APSI maintained?
How many countries are represented in the eligible universe for the Index?
How many companies are in the KLD Asia Pacific Sustainability Index?
What is “Sector Neutrality”?
Does KLD consider all constituents of the Index to be “socially responsible” companies?
How does KLD define “sustainability”?
What ESG factors are used in the selection process of APSI constituents?
How can I invest in the KLD Asia Pacific Sustainability Indexes?
How can I obtain a list of constituents of the Indexes?
Can I start a mutual fund or an ETF based on the Index?
How can I obtain analytics for portfolio performance measurement and attribution?
What is the KLD Asia Pacific Sustainability Index?
The KLD Asia Pacific SustainabilitySM Index (APSI or “The Index”) is a diversified regional benchmark constructed using environmental, social and governance (ESG) factors as selection criteria. The Index holds the top ESG-ranked companies by sector in the Asia Pacific region.
Top of Page
What universe does the Index utilize?
The APSI utilizes the S&P / Citigroup Broad Market Index Asia Pacific.
Top of Page
How is the Index constructed?
First, KLD and its research partners rate the environmental, social and governance (ESG) performance of each company in the eligible universe. The GSI Committee then selects the highest ranked companies that comprise 37.5% of the market capitalization of each sector in the Asia Pacific region.
Top of Page
How is the APSI maintained?
The GSI Committee is responsible for monitoring the holdings to ensure there are no major events that would require removal of a company from the KLD Asia Pacific Sustainability Index. The Committee also reconstitutes the APSI each year based on an updated ranking of the eligible universe of companies. KLD announces the reconstituted APSI on the first business day of November each year.
Top of Page
How many countries are represented in the eligible universe for the Index?
There are 5 developed market countries represented in the KLD Asia Pacific Sustainability Index eligible universe:
- Australia
- Hong Kong
- Japan
- New Zealand
- Singapore
Top of Page
How many companies are in the KLD Asia Pacific Sustainability Index?
For the most current number of companies, please see the APSI Fact Sheet.
Top of Page
What is “Sector Neutrality”?
A portfolio is sector neutral when its sector weights match those of the underlying market. Sector bias occurs when the sectors weights in an index or investment portfolio vary from those in the underlying market. SRI and sustainability indexes are often compared to unscreened market benchmarks (such as the S&P 500 or the S&P/Citigroup BMI World) to evaluate risk and return differences.
Sector bias contributes to financial risk, as measured by tracking error – in this case, how closely the APSI tracks a traditional benchmark. By making the APSI sector neutral, KLD reduces the expected tracking error of the APSI and eliminates one factor contributing to financial risk.
To achieve sector neutrality, KLD selects the top 37.5% of the market capitalization of each sector in the Asia Pacific region. This process creates a sustainability index that is expected to closely track the global market while exhibiting a strong sustainability identity.
Top of Page
Does KLD consider all constituents of the Index to be “socially responsible” companies?
KLD evaluates companies on the GSI based on a broad range of ESG issues. Companies included on the GSI have taken an industry leading position on issues relevant to its sector. KLD is aware that holdings in the GSI may not meet the standards of all socially responsible investors.
Top of Page
How does KLD define “sustainability”?
Sustainability refers to the degree to which a company addresses the social and environmental needs of the present without compromising the quality of life of future generations.
Top of Page
What ESG factors are used in the selection process of APSI constituents?
KLD uses a variety of factors including those listed in the following table. KLD’s GSI Committee identifies and applies key ESG performance indicators to formulate the rankings for each sector.
| Environmental, Social and Governance Factors |
Environment |
Social |
Governance |
| Policies and Mgt. Systems |
Employees |
Governance Structure |
| Products & Services |
Contractors & Supply Chain |
Business Ethics |
| Natural Resource Use |
Customers |
Transparency & Reporting |
| Climate Change |
Communities & Society |
Shareholder Relations |
| Waste & Emissions |
|
|
Top of Page
How can I invest in the KLD Asia Pacific Sustainability Indexes?
KLD Indexes is an independent index provider and does not mange any funds or money. However, KLD indexes are licensed as investable products for individuals and institutions.
For a complete list of products based on KLD Indexes, please see the Product Fact Sheet.
Top of Page
How can I obtain a list of constituents of the Indexes?
To purchase a current list of constituents, or to subscribe to constituent lists for one or more KLD indexes, please contact indexes@kld.com.
Top of Page
Can I start a mutual fund or an ETF based on the Index?
Please contact us at indexes@kld.com to discuss licensing opportunities.
Top of Page
How can I obtain analytics for portfolio performance measurement and attribution?
KLD can provide clients with index data to measure portfolio performance and conduct attribution analysis. Please contact indexes@kld.com.
Top of Page
|
