The number of PRI signatories exposed to hedge fund strategies is growing significantly each year. According to the PRI’s 2011 Reporting & Assessment survey, 137 PRI signatories have some exposure to investments in hedge funds (both asset owners and investment managers).
There are many issues to consider in relation to responsible investment and hedge funds. The fact that hedge funds, by their nature, are unlikely to be long-term investments make the alignment of long-term ESG interests a challenge. Additional issues include appropriate leverage levels and the ability to promptly react to changing market conditions, along with the advantages and disadvantages of short-selling. A lack of transparency, poor fund governance, remuneration and incentive mechanisms for hedge fund managers also play a part in the debate.
About the work stream
The work stream was formed in 2011 when a group of signatories formed a working group to write and release a discussion paper on responsible investment in hedge funds which was published in November 2012.
As the work stream develops, we are interested to hear your views onthe challenges you face in incorporating ESG into hedge fund investments and what the PRI should do next to drive responsible investment in hedge funds.
Resources listed may require PRI signatory extranet access.
Previous PRI in Person sessions
- Hedge funds: Can they be responsible investors? (September 2011)
- Hedge Funds Review: Interview with Kathryn Graham, Director, BT Pension Scheme Management (video interview and article)
- Hedge Fund Standards Board
- Alternative Investment Management Association
- A guide to institutional investor’s views and preferences regarding hedge fund operational infrastructure (AIMA, 2011)
- The value of the hedge funds industry to investors, markets and the broader economy (KPMG, 2012)
- The Carne Hedge Funds Governance Series