BlackRock has introduced its first ESG liquid alternative strategy, the Systematic ESG Equity Absolute Return Fund (SEEAR), which aims to provide investors with positive absolute returns with limited correlation to market movements, consistent with ESG-focused investing.
According to the 2021 Global Hedge Fund Benchmark Study, there has been a growing appetite among investors for sustainable and ESG investment strategies, and nearly 60% of hedge fund investors have allocated, or intend to allocate, ESG-focused funds in the next 12 months.
BlackRock’s Systematic Active Equity team seeks to identify the ESG attributes driving company returns through a combination of proprietary ESG research and alternative data, to deliver a portfolio that aims to achieve attractive absolute returns and be resilient in different market environments.
The Fund’s data-driven approach allows it to evaluate thousands of companies to uncover sustainable characteristics that also drive financial performance. The fund is managed by BlackRock’s Systematic Active Equity team, which is one of the pioneers of quantitative investing, with more than 35 years of experience in conducting innovative research to deliver differentiated results for clients.
Nicolas Nussbaum, Head of Hedge Funds and Liquid Alternatives for EMEA at BlackRock, says: “Investors increasingly need strategies and options that allow them to integrate sustainability across their portfolio while seeking resilient and diversified returns. SEEAR is one of the first funds of its kind in the market that meets client demands for a portfolio of liquid alternatives advanced by E, S, and G views.”
ESG Integration in the Fund
The Fund takes ESG-related characteristics into account when determining whether an investment is appropriate for the Fund. As part of its ESG framework, the Fund will seek to apply BlackRock’s benchmarks, which eliminate companies involved in activities such as controversial weapons, thermal coal, tar sands, tobacco and civilian firearms, along with companies that violate the United Nations (UN) Global Compact.
In addition, the investment team identifies prospective ESG measures and non-financial data that go beyond publicly disclosed corporate data and third-party scores to classify its research into four areas:
Risk mitigation insights that seek to identify corporate hurdles, such as ESG-related controversies.
Human capital insights that reflect the impact of employee well-being on engagement and productivity.
Social impact insights that focus on social outcomes that may also affect financial results
Transition perspectives that identify how companies are preparing for the net zero emissions economy.
The Fund is classified as Article 8 under the European Union’s Sustainable Finance Disclosure Regulation (SFDR). BlackRock expects 70% of its fund launches and repositionings in Europe this year to meet Article 8 or 9 requirements.
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