Hedge Funds Increasingly Embrace ESG Strategies, UBS Report Finds

Hedge funds are progressively integrating environmental, social, and governance (ESG) factors into their investment approaches, according to a recent report by Bloomberg citing analysis from UBS Group.

The research indicates that sustainability metrics are becoming more prevalent in hedge fund strategies and portfolio construction. This shift towards ESG aligns with broader growth in sustainable investing across the asset management landscape.

Analysts at UBS post that lower interest rate expectations for 2024 could catalyze a rebound in valuations for green assets and companies. With central banks potentially slowing their monetary tightening campaigns, investors may pivot back towards ESG investments that appeared overvalued during the rising rate environment of 2022-2023.

As sustainable investing goes mainstream, hedge funds seem to be following suit rather than resisting the trend. ESG data and ratings enable new dimensions of analysis while allowing funds to align with client preferences. The provides further evidence that hedge funds are leaning into ESG integration despite their reputation for shunning conformity.

John Zoraian John Zoraian is a Principal in Grassi’s Financial Services practice, where he provides expert fund administration, compliance and advisory services to hedge and private equity funds, funds of funds, master-feeders, investment advisors, broker-dealers, family offices, fintech entities and more. John draws from more than 35 years of experience in the hedge fund business. Prior to joining Grassi, he established S&Z Fund Services, a division... Read full bio

Categories: Advisory