According to EPFR, ESG funds have attracted USD340 billion of net inflows over the last two years alone, predicated on the fact that these products boost returns. This has led to managers ramping up their ESG investment frameworks in order to better screen companies – especially on the ‘E’ and ‘G’ side of things – and improve the way they track and report on ESG factors in their portfolios.
How hedge funds – who claim to be ESG-focused – demonstrate the value of sustainable investing is becoming a key task, and it relies heavily on having the right infrastructure to warehouse data, analyse it, derive insights from it, and ultimately improve pre-investment decision making. This is true of traditional as well as alternative data sets.
AI tools are overcoming this data challenge to support ESG fund managers in how they uncover fresh insights in their portfolios, and, more importantly, present ESG performance to investors. To what extent are ESG factors actually generating alpha? Is there a clear correlation?
With the Financial Times reporting that that three-quarters of ESG fund outperformance is due to “quality” metrics (such as high profitability) and other style factors, it could be that investors become even more prescriptive in terms of how they assess ESG portfolio performance.
ESG data analysis and how it links to performance will be the focus of the next FIS webinar, in conjunction with Hedgeweek, during which we will ask: “How can AI help illustrate your ESG edge to investors?”
- How are managers able to quantify the impact of an ESG strategy?
- What are the data management challenges that come with measuring ESG factors – and ultimately alpha - in investment portfolios?
- How are AI tools helping to overcome data collection and aggregation and derive fresh insights on companies?
- What are the main benefits being offered by technology platforms to improve ESG reporting to investors?
- To what extent can AI help managers
- Arnaud Langlois // Portfolio Manager, 1798 TerreNeuve Fund // Lombard Odier IM
- Trevor Headley // Vice President of Product Management, Hedge Funds // FIS
- James Williams // Editor In Chief // Private Equity Wire