AXA Investment Managers has designed a new fund in a bid to allow responsible investment while generating long-term returns and reducing risk.

The AXA World Funds Global SmartBeta Equity ESG fund aims to deliver 1-2% annual return with around 80% of market volatility over a full cycle as well as achieving a higher environmental, social and governance (ESG) score and a lower carbon footprint.

Jonathan White, AXA IM SmartBeta client portfolio manager, said the strategy should be a long term holding for clients.

However, given the current high levels of political uncertainty and increased volatility following the Brexit vote, he believes that the lower risk features could be especially attractive at this time.

“Our smart beta strategy is designed to deliver a more advanced low volatility approach, taking into account earnings volatility as well as price volatility," he said.

"Importantly, this allows investors to benefit from a lower risk profile in ‘down’ markets, as well as capturing returns in rising markets.”

“We are confident that a better ESG outcome does not detract from the core risk and return objectives of our SmartBeta strategies given the generally low historical correlation between ESG concepts and traditional financial statement information.

"Looking ahead we would expect the importance of ESG to increase and as such we believe the Fund is well positioned to adapt to the future and capture the benefits of avoiding ESG risk and capturing ESG opportunity."

The fund has institutional share classes and is registered for distribution in Austria, Denmark, Finland, France, Germany, Italy, Luxembourg, Netherlands, Norway, Sweden and the UK.

A retail share class is expected to be launched later in the year.