Research conducted by analysts at UBS Group AG indicates that hedge fund managers are progressively integrating environmental and social metrics into their investment strategies.
“Hedge funds have continued to step up sustainability integration into investment strategies,” according to the January 10 note published by the Global Wealth Management business of UBS.Â
There’s also “a subset pursuing dedicated sustainable investment deployment via equity long/short and credit strategies, mostly within thematic equities and green, social and sustainable bonds.”
Clients of hedge funds are also exploring “viable options” to gain entry into compliance carbon markets, as highlighted by UBS.
With the anticipation of lower interest rates in 2024, the investment industry is actively exploring new opportunities within the Environmental, Social, and Governance (ESG) sector.
There is a belief that green assets will rebound from the challenges they faced in the previous year. At UBS, the expectation is that the Federal Reserve will proceed with rate cuts, anticipating a “soft-ish landing.”
That should “increase confidence for business investment in areas tied to sustainability,” analysts at the Swiss bank said. “Selectivity remains important, however.”