Alternative fund managers are most influenced by ESG when making fund investment decisions

Alternative fund managers believe it will be harder to launch new funds unless they have a strong ESG focus

ESG credentials and strategy are the biggest influencers when it comes to making fund investment decisions, according to new research* among alternative fund managers across the UK, US and Europe carried out by Ocorian, a specialist provider of alternative fund services and global leader in entity administration, fiduciary and compliance solutions.

This is followed by the investment fund’s manager and its capital growth, which ranked as the second and third most important dynamic respectively when it comes to making fund investment decisions.

It will be harder to launch new funds without a strong ESG focus

Its study found almost all (98%) alternative asset managers agree that it will become harder to launch new funds unless they have a strong ESG focus. Of these, almost two in five (39%) strongly agree with this view.

As well as being central to fund investment decisions, alternative fund managers believe ESG will have the second biggest impact on innovation in the alternative asset management sector. The biggest impact, they believe, will come from growing pressure from investors for new solutions and advances in technology. Data analytics will have the third biggest impact, the research found.

The study from Ocorian, which manages over 15,000 structures on behalf of 6,000+ clients globally, shows the UK is ranked as the jurisdiction which will most increase in popularity for alternative fund managers targeting European investors over the next 18 months. This is followed by Jersey, Mauritius and Guernsey.

Paul Spendiff, Head of Business Development, Fund Services at Ocorian, said: “Even when faced with tough economic conditions, our research shows that ESG credentials and strategy are now of the utmost importance to alternative fund managers, overtaking more traditional investment decision-making criteria such as the investment manager and capital growth. For an increasing number of fund managers, a strong ESG strategy and credentials ultimately drives strong, long-term performance as well as having a huge impact on innovation in the sector.”

How Ocorian Fund Services can help with your fund administration

Ocorian’s fund services team delivers operational excellence across fund administration, AIFM, depositary and accounting services to the world’s largest financial institutions along with dynamic start-up fund managers and boutique houses. Its team of over 300 funds specialists work across all major asset classes of alternative investment funds such as private equity, real estate, infrastructure, debt and venture capital, whilst its specialist Islamic Finance team is a leading provider of Sharia-compliant investment structures.

*Ocorian commissioned independent research company PureProfile to interview 100 alternative fund managers across real estate, private debt, private equity and infrastructure, residing across the UK, US, France, Germany, Netherlands, Sweden, Switzerland, Finland and Norway during April 2023.