Responsible Hedge Funds - Assessment of an SRI Concept

Pinner, Wolfgang (2007) Responsible Hedge Funds - Assessment of an SRI Concept. [Dissertation (University of Nottingham only)] (Unpublished)

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The paper in hand shows an analysis of the applicability of responsible or SRI (Socially Responsible Investment) processes to the asset class of hedge funds. One of the major findings is, that hedge fund investors obviously can create corporate social performance on top of financial performance directly in two ways. The alternatives are to give financial support on the basis of investments or to start a dialogue with the company,the engagement process. On the basis of selling shares short, responsible hedge fund are able to use an additional lever in their engagement process.

The paper illustrates that there are currently three different approaches to tackle the process to create a responsible hedge fund product. These are firstly a single strategy fund, secondly an overlay strategy and finally a fund of funds with SRI criteria.

On basis of the research done, it seems that a product that would meet the requirements of a high CSP (Corporate Social Performance) creation the best would be based on a single strategy long-short equity product. With regards to the risk aspect, a fund of funds with SRI criteria is preferable in spite of the SRI-research related shortcomings regarding some of the asset classes involved. Clear definitions and research activities regarding missing asset classes like those of commodities and currencies should be a key issue for future research and product development. In addition to that, responsible hedge funds have to meet some essential criteria in order to render strong CSP to investors. These include above average transparency standards and avoidance of disruptive short-termism.

Item Type: Dissertation (University of Nottingham only)
Keywords: Socially Responsible Investment, hedge funds, corporate social performance , strategy fund,overlay strategy ,
Depositing User: EP, Services
Date Deposited: 16 Nov 2007
Last Modified: 23 Oct 2016 23:04

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