A sustainable meeting of minds

Two of the best-known names in finance are coming together to a launch a new multi-asset fund management strategy in 2021.

Bridgewater Associates, the worlds largest and best-known hedge fund manager is partnering with France’s Lyxor Asset Management to create a new multi-asset strategy targeting the theme of sustainability and sustainable investing.

The new vehicle will aim to offer investors the opportunity to realise their financial and sustainable investment goals by using Bridgewater’s established “all-weather “ multi-asset framework to trade assets that are in line with the United Nations sustainable development goals.

Bridgewater which has more than $130 billion of assets under management or AUM will bring its research expertise to the fund’s asset allocation process and will select investments from within the public markets that meet the UN criteria.

Lyxor will bring its considerable experience in managing ESG assets to the partnership it currently has around $18.0 billion under management in the sector and it will manage the UCITs strategy which is necessary if the funds are to be marketed in Europe, where Bridgewater will act as a sub-advisor.

The UN mandate is made up of 17 interlinked objectives including, an end to poverty and hunger, the pursuit of good healthcare, well being and education, clean water and sanitation, reducing inequality and the creation of more sustainable communities and cities. The goals were laid down in 2015 with a 15-year target for achieving them

Bridgewater’s chief operating officer Bryan Kreiter said of the new partnership that “scalable, sustainable investing is a “strategic priority” for Bridgewater and its clients” and that “Using the same research process that we have developed over the last forty years, we have built a systematic process to engineer both the sustainability and financial characteristics of portfolios,”

Lyxor’s chief client officer Nathanael Benzaken commented that “Our clients’ appetite for sustainable investing has grown significantly in recent years, with investors setting goals that combine financial and sustainability outcomes. Lyxor’s culture of innovation and recognized ability to design transparent investment frameworks have helped us achieve client goals in this area”

The new initiative between Bridgewater and Lyxor is not the first asset management product to align itself with the UN’s sustainable development goals, for example, UK based M&G manages a positive impact fund with £133.26 of AUM which returned +17.92% between December 2019 and end November 2020.

Whilst Germany’s DWS has €703 million in its Invest SDG Global Equities fund, which generated returns of +16.96% between October 2019 and October 2020.

Those examples suggest that sustainable investing can pay dividends and can compete with less socially focused investment products.

Bridgewater and Lyxor’s products should be launched in March 2021 and whilst they probably won’t make much of impact initially the partnership does open up an intriguing mix of cultures between the two groups, and it will be fascinating to track how well the two firms work together on a common goal.