Environmental, social and governance-focused strategies have appeared in the top 10 most popular hedge fund strategies for the first time, according to an annual investor report by Credit Suisse.
The Swiss bank polled 275 global investors including family offices, private banks, pension funds, endowments and funds of hedge funds for its 2018 Mid-Year Hedge Fund Investor Survey. The research was conducted with investors with a total of more than $1 trillion in hedge fund investments.
Researchers found that 25% of investors now have a hedge fund allocation to an ESG strategy. The survey found allocations to ESG strategies have experienced one of the five largest positive “swings” during the first half of 2018, compared to the same six month period in 2017.
Looking at the swing in demand for hedge fund strategies, ESG strategies saw a +4% swing during the period, behind Macro Discretionary (+13%), Credit – RV (+9%), Convertible Bond Arbitrage (+6%), and EMN Fundamental (+4%) strategies.
When looking at the most preferred strategies by region, ESG strategies were considered to be the most preferred by 19% of investors in the EMEA region, placing it as the fourth most popular strategy between January and June 2018.
ESG strategies placed fifth in the Asia Pacific region, with 24% of investors considering these funds to be preferred strategies. Despite the popularity in EMEA and APAC regions, the strategies did not feature in the top five strategies in the Americas, however.
Jaynita Sodhi, Co-head of US Credit Suisse Capital Services, described ESG strategies’ inclusion as a top strategy preference as “notable” in a commentary released alongside the report.