London Firm Launches 'Sustainable Finance' Hedge Fund

Jul 3 2007 | 8:11am ET

London-based alternative asset manager Arch Investment Group is launching a hedge fund aimed at institutional investors looking to invest in “sustainable finance.”

The Arch Sustainable Finance Fund, which has an initial capacity of approximately US$150 million, is designed to capture value in investments whose value and profitability are underpinned by major long-term environmental, infrastructural and socio-economic trends.

The fund targets a net return of 15% to 20% net of fees per year, with a volatility target of 5% to 8% per year over the medium term.

The fund has the same core investments as the firm’s Sustainable Opportunities Fund, which was launched at the beginning of this year. That fund, which is currently closed to new investors, has returned over 11% since its inception five months ago. The new vehicle is designed to have a stronger focus on short-term, high yielding finance within the core areas of sustainable investment.

“Environmental stewardship is fast becoming a dominant global investment theme. Similarly, long-term socio-economic trends and infrastructural demands are influencing investment behavior within developed and developing nations,” says Stephen Decani, a partner at Arch. “As with all our funds, Sustainable Finance has low correlation to equities and bonds, and hence an intrinsic defense to market underperformance.”

The new offering charged a management fee of 1.5% and a performance fee of 20%. The minimum investment is US$150,000 or its equivalent. The fund is targeting institutional investors worldwide, and is ultimately expected to grow to over US$300 million.

Arch, which now has $450 million in assets under management, was founded in 2002 by Robin Farrell, the former head of alternative investments at Dresdner Kleinwort Wasserstein.

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