A $2.5 billion Swedish hedge fund manager says clients would like to put their money into sustainable investing strategies but are unsure of the potential trade-off when it comes to returns.
Serge Houles, managing director and chief client officer at Stockholm-based IPM, said there's not enough information about the impact on returns of switching to investments based on environmental, social and governance goals.
"The trade-off between risk, alpha and ESG is still not well understood, for instance, in the case of long-short portfolios," Mr. Houles said in an emailed comment.
IPM, which along with roughly 3,000 other asset managers and owners is a signatory to the Principles for Responsible Investment, recently hired portfolio managers from Goldman Sachs to help build its alternative risk premium strategies. Mr. Houles said IPM "will incorporate ESG factors both at the macro and micro level."
Last year, IPM was named the best large-cap commodities trading adviser over a five-year horizon by CME Group and BarclayHedge. But IPM's systematic macro strategy is suffering its third year of losses, and the fund manager wound down its value based long-only equity business in 2019, citing a challenging environment.
Mr. Houles said clients are "hesitant to sacrifice the promised alpha from absolute return strategies." So they "stay on the sideline."