SAN FRANCISCO — Barclays Global Investors launched Sudan-free equity index strategies to help U.S. public pension plans and other institutional investors comply with restrictions on investing in companies that have business ties with the country.
The strategies will track the Standard & Poor's 500, the Dow Jones Wilshire 5000, and the Russell 1000, 2000, 3000 indexes, as well as the Morgan Stanley Capital International EAFE and its emerging markets indexes, said Amy Schioldager, managing director, responsible for U.S. equity indexing products.
"We're just responding to the marketplace by making these strategies available," added Tom Taggart, BGI spokesman.
Ms. Schioldager cited legislation adopted in Illinois, New Jersey and Oregon calling for Sudan divestment and proposals for similar laws in California, Connecticut, Indiana, Missouri, Washington, New York, and Ohio.
Several clients have already expressed interest in the Sudan-free equity strategies, Ms. Schioldager said.
BGI is using KLD Research & Analytics Inc., Boston, to screen for Sudan-connected companies, she said. "The initial plan is to start with KLD because they are accepted already (in the market) for their screen."
Institutional Shareholder Services Inc., Rockville, Md., is the other research screening firm BGI looked at and would consider using, she added.
BGI is also looking at developing fixed-income strategies that would exclude bonds of issuers with ties to Sudan, as well as Sudan-free enhanced equity strategies, Ms. Schioldager added. She said there is no timetable for introducing them.
Along with the new Sudan-free equity indexes, BGI will also customize strategies for clients with particular Sudan-related restrictions.
Ms. Schioldager couldn't say how big the market for Sudan-free strategies will become in the next year.
"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 U.S. and international stock indexes," according to a BGI statement. "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.