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Bridgewater And Lyxor Offer Fresh Take on Sustainable Investing

A new partnership between Bridgewater Associates and Lyxor Asset Management looks to add an innovative new dimension to sustainable investing

When the world’s biggest hedge fund partners up with one of the world’s biggest banking companies to pursue a new sustainability strategy, the financial world tends to pay attention. That was the case late last year when Bridgewater Associates announced plans to launch a venture with Lyxor Asset Management, a subsidiary of French banking giant Societe Generale.

Bridgewater, headquartered in Westport, Connecticut, ranks first among hedge funds with more than $140 billion in assets under management. It was founded 50 years ago by Ray Dalio, who still serves as the fund’s co-chairman and co-chief investment officer. Dalio has made a name for himself as both a philanthropist and a supporter of Environmental, Social, and Governance (ESG) investments. Three years ago he and fellow billionaire Mike Bloomberg announced plans for a marine biology venture dedicated to ocean conservation.

The Lyxor partnership was announced in December 2020. One of its main benefits is that it gives Bridgewater greater exposure to ESG investing in Europe. The new venture will operate under a Undertakings for Collective Investment in Transferable Securities (UCITS) structure, which is essentially a cross between a mutual fund and a hedge fund. It will leverage Bridgewater’s “All Weather” strategy, which uses a flexible approach as a way to earn profits in many different economic scenarios.

In terms of sustainability, the fund’s focus will be on the United Nations Sustainable Development Goals (SDGs), which are designed to help fix 17 different social and environmental challenges by the year 2030. Those challenges include poverty, hunger, clean energy, climate change, gender equality, and sustainable cities. According to Bloomberg Green, the UN estimates that its 17 goals will require annual commitments of $5 trillion to $7 trillion globally over the next decade.

Bridgewater’s UCITS fund will be managed by Lyxor and regulated by the European Union. It was scheduled to launch last quarter.

“The journey of scalable sustainable investing is a strategic priority for Bridgewater and our clients,” said Bridgewater Chief Operating Officer Brian Kreiter. “Using the same research process that we have developed over the last 40 years, we have built a systematic process to engineer both the sustainability and financial characteristics of portfolios. We are excited to continue to collaborate with Lyxor in meeting the challenges of global investors.”

Bridgewater’s website outlines a number of ESG strategies. From a financial standpoint, the goal is to generate positive and consistent returns across various economic environments, while also making an ESG impact that aligns with the UN SDGs.

Lyxor is a logical choice for this kind of fund because of its track record of partnering with others on sustainable investing. The firm currently manages about 15 billion euros worth of ESG assets.

“Our clients’ appetite for sustainable investing has grown significantly in recent years, with investors setting goals that combine financial and sustainability outcomes,” said Nathanael Benzaken, Lyxor’s Chief Client Officer. “Lyxor’s culture of innovation and recognized ability to design transparent investment frameworks has helped us achieve client goals in this area. We are thrilled to expand our over 15-year relationship with Bridgewater with this new venture.”

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