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Alternative Market Briefing

One-third of alternatives investors refrain from investing in a fund with inadequate ESG policy, says survey

Thursday, March 19, 2020

Laxman Pai, Opalesque Asia:

More than one-third of global alternatives investors have refrained from investing in a fund because it had an inadequate ESG policy; 26% said this occurs "sometimes" and 9% said it happens "frequently."

This is according to a Preqin global study, which surveyed 400 alternatives investors around the world for their views on the current state of ESG.

The survey pointed out that while this has never been the case for 23% of respondents, a surprising 42% told Preqin they do not consider ESG principles during fund evaluation at all - a clear indication that there is still far to go before ESG will be considered mainstream.

Despite this, roughly four in five respondents believe ESG-focused funds perform at least as well as those that do not focus on ESG, with 56% saying ESG-focused funds performed "about the same" and 23% claiming they tend to perform better. The remaining 21% think ESG-focused funds tend to perform worse.

Anecdotally, ESG's continued integration into asset allocation will, in the words of one investor surveyed, "predominately depend on its ability to produce consistent returns and keep pace with traditional alternative investment."

Looking forward, 61% of survey respondents said ESG will become more integral to the industry in the next 36 months, with 10% believing it is already an integral part of the industry.

Another 22% said it would stay as integral as it is today, while just 7% said ESG will become le......................

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