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New hedge fund turns ESG inefficiencies into trading profits

Two former managers at Nordea Asset Management are some of the architects of a market-neutral fund dedicated to environmental and social investment objectives, targeting 10-12 percent annually. But navigating the ESG tsunami and its increasingly crowded trades is no easy feat.

Mikael Fast, Head of Sales and Antti Savilaakso, Head of Research and Portfolio Manager. | Photo: PR / Impact Cubed

In December 2021, analytics firm and investment manager Impact Cubed launched its market-neutral equity fund Impact Alpha, which targets 10-12 percent in annualized returns. The fund harvests the returns by exploiting inefficiencies in themes related to environmental, social and governance factors through long positions in sustainable companies while shorting their unsustainable counterparts.

Examples are investing in providers of plant-based proteins while shorting meat-based proteins, dropping junk food for healthier alternatives or taking positions in US Real Estate Investment Trusts (REITs) where the idea is to short those with property most exposed to flooding and rising sea levels.

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