Taking stock of ASU professor’s responsible investing research
On the New York Stock Exchange trading floor on May 20, an Arizona State University professor stood on the familiar white balcony overlooking a crowd of visitors, media and NYSE members.
Sunil Wahal, the Jack D. Furst Professor of Finance at the W. P. Carey School of Business, was there to ring the closing bell and celebrate the launch of four exchange-traded funds (ETFs) he helped create with asset manager Avantis Investors, a unit of American Century.
As the director of ASU’s Center for Responsible Investing, Wahal is an academic consultant to Avantis Investors, which uses cutting-edge research to deliver portfolios to various investors.
“ASU is an institution that has always supported research to help people,” says Wahal, “and the work I do in investment strategies and implementation has direct application in the real world.”
The Center for Responsible Investing will ensure the public can access research like Wahal's.
"We put it out in the public domain. Anybody can read it, and anybody can use it," he said. However, building something from research takes more than reading a scientific paper and replicating it.
"What Avantis does is take the best research out there and applies it and produces robust portfolio solutions that benefit people," Wahal says.
The center gives outside parties a central point of contact to use and advance ASU research for the public good and to help the university and its student body. The center’s goals also align with ASU’s Charter.
Three of Avantis’ newly launched ETFs are what Wahal refers to as "responsible" ETFs. That is because they allow people to invest in well-diversified portfolios of stocks according to their environmentally or socially conscious beliefs. At the same time, these ETFs tilt the broader market toward higher returns using academically rigorous methods, which have often been inaccessible to many individuals. They are designed in a highly scientific manner, leveraging cutting-edge academic research in financial science, including some of Wahal's work.
"The purpose is to be democratic," Wahal says. "So whoever wants to purchase Avantis' responsible ETFs — a small individual investor with particular preferences or a large institution fulfilling fiduciary obligations — can do so. Most importantly, investors do not have to pay extra to reflect their preferences and beliefs; the fees for responsible ETFs are identical to their sister portfolios.”