Hedge funds are investing approximately 10 per cent of their assets in line with responsible investment principles, according to a new survey of the sector.
A survey of 80 hedge funds by the Alternative Investment Management Association (AIMA) has revealed an increasing level of demand for responsible investment strategies in the alternatives sector.
The AIMA report, titled From Niche to Mainstream: Responsible Investment and Hedge Funds, was a joint publication with the Cayman Alternative Investment Summit.
The report found that $59 billion of the total $550 billion in hedge fund assets of the 80 asset managers surveyed were invested using responsible investment practices.
Hedge funds in the survey also said they have seen a 50 per cent increase in demand for responsible investment from either current or prospective investors in the past 12 months.
In order to meet the growing appetite, around 40 per cent of asset managers surveyed have either hired a responsible investment specialist or "are planning to do so", according to the report.
AIMA chief executive Jack Inglis said the findings "may come as a surprise" to some in the industry, particularly given the premise of hedge funds is that they are not constrained in the investments they can make.
"While some hedge fund firms are skeptical about how practical it is to implement a responsible investment strategy, the conversations I’ve had with leaders across the industry reveal a diﬀerent story," Mr Inglis said.
"Instead of focusing on the question of whether to adopt responsible investment, a significant number of hedge fund firms are now focusing on how to adopt responsible investment while continuing to deliver the strong risk-adjusted returns that their investors have come to expect," he said.
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