Demonstrating that good governance drives stock performance
M&E operates three indexes with its partners which demonstrate the effectiveness and accuracy of M&E Ratings in predicting equity performance. M&E Stars Indexes have strongly outperformed their benchmarks over years.
Unlike other portfolios, the M&E Stars Indexes screen and weigh their components according to their M&E Rating scores. Companies with higher sustainable management rating scores will benefit from a greater weight in the indexes than companies with lower scores.
The result is a consistent outperformance over leading benchmarks. The oldest M&E Stars Index, the M&E LatinFinance Sustainable Stars Brazil Index, has outperformed the Ibovespa benchmark since its inception in December 2009 between +60% and +70% for a year.
The approach employed in the M&E Stars Indexes is fundamentally different from other portfolio approaches in that it,
- financially quantifies component companies according to their management performance (M&E rating score) and weigh them in the index´ according to this value,
- includes fewer companies because the weighting according to management performance obviates having to diversity across numerous companies and sectors; risk is reduced because of high, sector adjusted management scores
- has a higher predictive value because it uses management values which drive future financial performance.