ESG hedge fund strategies offer unique advantages over their active long-only and passive peers.
- Sustainable and socially responsible returns uncorrelated to stock and bond markets
- The ability to capture both upside and downside through shorting
- A wider range of innovative ESG strategies
- Risk mitigation during periods of increased volatility
- The ability to engage with management to enact positive change
Accessing the ESG fund universe
HFR Investments provides institutional investors with flexible structuring options to access the rapidly expanding ESG hedge fund universe: direct allocations, custom ESG fund of funds, and investable HFR ESG indices. We offer ESG advisory services to assist institutional allocators in underwriting, selecting, and monitoring ESG hedge funds—available for asset owners as well as consultants and OCIO businesses.
ESG hedge fund indices and trackers
Minority- and women-owned indices
The HFRX Diversity Index and the HFRX Diversity Women Index are designed to be representative of the overall universes of minority- and women-owned hedge funds, respectively.
Climate change index
The HFRX Climate Change Index is composed of hedge fund strategies that identify opportunities in securities with the goal of reducing the impact of climate change.
Frequently asked questions
Why should allocators consider ESG when investing in hedge funds?
ESG factors can provide hedge fund managers with additional insight that aims to improve risk-adjusted returns. ESG hedge funds can offer sustainable, socially responsible returns uncorrelated to stock and bond markets, investments suitable for an ESG mandate with upside and downside capture, and risk mitigation during periods of increased volatility.
Do ESG strategies limit your investment opportunity set?
ESG hedge fund strategies vary widely and offer an array of opportunity sets. Rather than limit a manager’s ability to provide risk-adjusted returns, incorporating ESG into the investment process can potentially enhance the opportunity set.
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