Hedge fund giant Bridgewater makes sustainability splash with new multi-asset strategy

Sustainable indexes

Bridgewater Associates, the world’s largest hedge fund, has unveiled a new multi-asset strategy which will trade assets that align with the UN’s Sustainable Development Goals, in a move aimed at further tapping into investor appetite for sustainable investing.

The Lyxor/Bridgewater All Weather Sustainability Fund – which is managed by Lyxor Asset Management and sub-advised by Bridgewater – is built around Bridgewater’s pioneering systematic research process, and will use the hedge fund giant’s “All Weather” asset allocation framework to engineer its portfolio.

Specifically, the UCITS compliant strategy will look to identify and trade a range of public market assets, including equities, government bonds and commodities, that meet the United Nation’s 17 SDG benchmarks.

The fund will be managed by Bridgewater’s co-CIOs for sustainability Karen Karniol-Tambour and Carsten Stendevad, and is pitched towards investors who want to meet both financial and sustainability targets at scale. According to media reports, the strategy has some USD2 billion of committed capital.

The launch is part of a continued expansion into sustainability-focused investing by Bridgewater, which was founded by hedge fund titan Ray Dalio and today manages some USD150 billion in assets.

Regarded as something of a fringe concern less than a decade ago, environmental, social and governance (ESG) indicators have grown in importance among both managers and investors, with a range of marquee-name hedge funds – including Sir Chris Hohn’s TCF, Man Group, Caxton Associates, and JP Morgan – joining the impact investing fray in recent years.

Stendevad, who was appointed earlier this year alongside Karniol-Tambour to lead Bridgewater’s sustainable investing group, said sustainable investing is now a “strategic priority” for Bridgewater and its clients.

“In recent years, we have seen a fundamental shift in the investment community, with the expansion of objectives from risk and return to also include impact,” Stendevad commented.

Nathanael Benzaken, Lyxor’s chief client officer, said the launch further expands his firm’s “fruitful 15-year relationship” with Bridgewater, adding: “Our clients’ appetite for sustainable investing has grown significantly in recent years, with investors seeking to combine financial and sustainability outcomes.”

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Hugh Leask
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