Hedge Funds Putting More Focus on ESG

Hedge funds are starting to face the increasing interest in responsible investing.

According to the survey by BarclayHedge, a division of technology firm Backstop Solutions, four out of ten hedge fund managers now consider environmental, social and governance (ESG) ratings in their capital allocation decision.

The reason might be explained by Cerulli Associates, in collaboration with UNPRI. Cerulli Associates show that the growing clients’ concern for ESG issues is the primary force pushing 27% of hedge funds managers to integrate ESG considerations into investment analyses.

This, as we remarked in one of our posts, shows that ESG factors are acquiring more and more importance.

In order to face the increasing interest in responsible investing, hedge funds will need to integrate ESG factors in their strategies. Well-known funds Man Group and Caxton Associates, for example, are among those that are searching for ways of identifying stocks with reliable ESG characteristics, to be considered together with traditional factors for investment decision.

Until some years ago, responsible investing was a niche sector that provided lower returns to investors. But recently, things have changed: hedge funds should consider the change in their strategies, in order not to miss this opportunity.

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