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The integration of ESG and sustainability As environmental , social and governance ( ESG ) considerations continue to gain prominence , asset managers are under increasing pressure to integrate these factors into their investment processes . A study by Preqin found that 77 % of hedge fund managers expect ESG to play a more significant role in their investment decisions by 2025 .
“ ESG is an important topic but one that remains in flux from a regulatory point of view ,” says Matt .
“ Therefore it ’ s important for hedge funds and asset managers in general not to get carried away with their sustainability claims . Instead , focus should be on having robust processes that go beyond simply relying on the ESG providers ’ risk scores .”
Matt emphasises the importance of ESG in the due diligence process , saying : “ ESG will increasingly become an important part of the due diligence process , which is where active managers like ourselves can make a difference not only by delivering alpha but also by identifying those companies that are set to contribute the most to a sustainable future .”
To meet heightening ESG standards , asset managers must develop robust ESG policies and frameworks to guide their investment decisions . This involves creating clear criteria for evaluating companies ’ ESG performance and integrating these factors into their risk assessment models .
77 %
of hedge fund managers expect ESG to play a more significant role in their investment decisions by 2025 , according to a study by Preqin
The expansion of alternative asset classes Alternative asset classes are poised for significant growth heading into 2025 . A report by Preqin projects that alternative assets under management will reach US $ 17.2tn by 2025 , up from US $ 10.7tn in 2020 . This expansion includes digital assets , real assets , private equity and private debt .
The growth is driven by investors ’ search for higher yields in a low-interestrate environment and the desire for portfolio diversification .
A survey by Fidelity Digital Assets found that 36 % of institutional investors own digital assets – and this number is expected to grow .
Matt says : “ There are a few ways of looking at growth drivers : supply-side drivers and demand-side drivers .”
On the supply side , he notes the role of regulators in allowing new structures to be distributed to a new audience , “ which
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