Critical hedge fund sees better way to do ESG

Welton, Patrick (Welton Inv) from co for use 575x375
By Jon Hay
02 Jul 2020

Environmental, social and governance investors have been patting themselves on the back this year because their funds have tended to outperform during the coronavirus crisis. But a San Francisco hedge fund believes they are doing a poor job of shielding investors from the general risk of the stockmarket and more quantitative methods would improve the outcome.

The most common approaches to ESG investing in public securities involve taking a general benchmark — such as the S&P 500 or MSCI All Countries World Index — and applying a filter based on companies’ ESG scores.

Low ESG performers are either underweighted or excluded, while high performers are ...

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