Hedge funds go environmental

In response to the strong and growing interest in environmental issues, particularly climate change, Swiss-based RMF Investment Management has launched a global fund of hedge funds that will invest purely in environmental industries and strategies.

The RMF Environmental Opportunities Fund, which the company said is the first of its kind in the world, will invest in environmentally-friendly technology, renewable energy, initiatives to reduce carbon emissions and conserve water and sustainable infrastructure.

The fund, in which RMF has invested $25.1 million, is aimed at institutional investors and designed to generate returns of between 8 and 10 per cent with medium-level volatility. As a hedge of hedge funds, it includes investments in multiple hedge fund managers, thereby increasing diversification.

RMF head of new alternative investments Michelle McClosky said that environmental investments are evolving rapidly.

“Environmental hedge funds offer great potential, but the challenge for us initially was to find enough liquid strategies with institutional-quality managers. When we started looking at the market just over a year ago, only a handful of these hedge funds existed. But over the past year, liquidity in both the equities and futures markets has increased dramatically and we have seen a corresponding increase in the number of fund offerings in the sector. With over 35 hedge funds to choose from, we are now confident the market is scalable and that managers are here to stay.”