ESG factors increasingly put into hedge funds
Interest and investment in hedge funds that incorporate environmental, social and governance factors are on the rise among U.S. investors, although demand still trails that of European investors.
While some hedge fund firms have included one or more ESG factors in their investment strategies for years or have created dedicated ESG funds, others still are evaluating the efficacy and return potential of investment in portfolio companies that meet ESG standards, sources said.
“There are two ways to do ESG. You can own companies and vote to make a bad company into a better company or you can own less of the bad guys and short them,” said Clifford S. Asness, managing and founding partner of AQR Capital Management LLC, Greenwich, Conn., during a session at the Morningstar Investment Conference in Chicago on May 17.
“Interest in ESG hedge funds is gigantic and growing,” Mr. Asness said.
About 22% of AQR’s total assets under management of $117 billion as of March 31 was invested in the firm’s dedicated ESG strategies.
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