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Friday, November 10, 2017

A DFA Vet Plans a Niche ESG Buildout

Reported by Neil Anderson, Managing Editor

A DFA veteran just launched his first mutual fund with a new venture, and he envisions a whole family of ESG funds. Yet he's still teaming up with his old employer, at least for fund number one.

Last week San Francisco-based Vert Asset Management launched the Vert Global Sustainable Real Estate Fund, subadvised by DFA. Looking ahead, Vert CEO Sam Adams tells MFWire, Vert may launch ESG funds focused on emerging markets or various fixed income niches. Watch for Vert to team up with some TAMPs, and watch for Adams to expand the Vert team in 2018.

The idea, Adams explains, is to help FAs fill in various investing niches with ESG funds so that advisors and others can build complete models with ESG funds in each slot.

"Our long-term goal is to be a go-to provider for advisors," Adams says. "Our mission is to make sustainable investing easier."

Adams, an alumnus of University of Colorado Boulder and of University of California Davis, is a DFA sales veteran who worked both here and in Europe and worked with FAs. While they were in London his wife, Sarah Adams (also a DFA alum), got into sustainable and impact investing through a consulting firm. Four years ago the couple "saw a gap in the marketplace," Sam Adams said, with lots of SRI and ESG funds being launched in the major asset classes but few available in the less-vanilla categories. They also saw another gap, between passionate, focused active ESG asset managers and big generalist, prudent but dispassionate asset managers.

And thus was Vert born, to bridge those two gaps. Sam Adams serves as CEO, while Sarah Adams serves as chief sustainability officer.

"We spent the last year and a half building, with help of a couple of professors," including Brad Barber of UC Davis, Franz Fuerst of Cambridge, and Gary Pivo of the University of Arizona.

For Vert's first fund, an ESG real estate fund, the startup turned to Sam Adams' old employer, DFA. Vert would select the securities through its screening process, he says, but they "needed an efficient trading and implementation manager," which led them to DFA.

"They're of course very good trading," Sam Adams says. "They also have a whole hell of a lot of money invested in REITs and many years of experience."

In terms of distribution, Vert is unsurprisingly aiming at RIAs to start with. Its debut fund only offers a single, institutional share class, commission-free, and Sam Adams expects the fund to be available on the Charles Schwab, Folio, and TD Ameritrade platforms any day now.

"We'll branch out into the family offices and institutions when we have a longer track record, as well as the wirehouse space," Sam Adams says. "We are open to retail investors, but we don't have any marketing efforts planned for that."

Looking ahead, Sam Adams predicts that Vert will do some hiring in 2018.

"We don't need to hire anyone just yet," Sam Adams says. "I imagine that next year we'll have to ramp up and get some staff."

Vert is also looking at teaming up with TAMPs.

"We are partnering with a couple of firms in helping them build out their sustainable investment offerings," Sam Adams says. 

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