Civic Capital Sees Growing Interest In Socially Responsible Investing

Nov 17 2006 | 12:33pm ET

Boston-based Civic Capital Group is among a growing number of investment firms that aim to create positive change in society, while at the same time generating high returns for investors. Three years ago, the firm launched the Civic Capital Group Fund I, a conservative long/short hedge fund that invests in companies that actively address social and environmental problems.

“At its core, if you tie into the big themes of the world at the moment, that’s where you’re going to get the bang,” says Civic Capital President John Desantis. “If you look around the world, with the global climate situation and the energy situation, this is a major defining investment scenario.” Civic Capital invests in Standard & Poor’s 500 companies involved in water purification, microfinance, nutrition and ethanol, among other things. But Desantis insists that it is not a green fund because its philosophy extends beyond concerns for the environment.

The firm does not use a negative screening process, which has typically been at the heart of socially responsible investing strategies. Instead, the founders take a more proactive approach, enlisting the advice of experts including David Farmer, dean of the University of Rhode Island Graduate School of Oceanography, who serves as a sounding board on topics such as desalinization and global warming.

Desantis developed the idea for the fund while managing separate accounts. “I noticed there was a disconnect between what investors’ goals were and what we were doing [in managed accounts],” he says. “I saw an opportunity to create a product that would be much more exposed to positive change.”

Like many of its counterparts, the fund goes long on the “good” firms—such as General Electric, which has recently adopted a green agenda called Ecomagination, ICICI Bank, an Indian bank engaged in microfinance lending, and Colorconnetics, which makes energy efficient lighting—and it shorts the “bad” ones. Past shorts have included Krispy Kreme and Tootsie Roll Industries.

Investors in the fund are high-net worth individuals and family offices, but with the three-year mark behind them, Desantis says interest from the institutional community is growing. Obstacles, however, still exist. For one, SRI is essentially value investing, considered a no-no by some institutional investors.

Additionally, many sophisticated investors experiment with socially responsible investing through funds of funds, rather than single-manager hedge funds, explains Phil Matyi, chief financial officer and chief operating officer at Civic Capital Group.

The fund, which Desantis describes as “very conservative” is structured like a traditional hedge fund. The minimum investment is $1 million and fees are 1% for management and 20% for performance. Returns on the fund, which has less than $100 million in assets, have been in the high single digits since inception, though Desantis declines to give specific numbers.


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Sass Program To See Brooklyn College Students Run Hedge Fund

Nov 26 2014 | 7:56am ET

They say you learn by doing, so the students at Brooklyn College will learn to run...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.