The following article on a green fund of hedge funds was originally published on the website www.socialfunds.com and can be found here. (For more information on environmentally focused hedge funds, please also see our article on Carbon hedge funds.)
Over the Hedge: New Green Hedge Fund of Funds
by Anne Moore Odell
Kenmar plans to launch socially responsible hedge fund of funds for institutional investors.
SocialFunds.com — Kenmar recently announced that it will be launching a new SRI hedge fund of funds, the Kenmar Global ECO Fund SPC Limited, which will be available to investors July 1. Kenmar hopes to tap into the growing interest of investors in environmental, social, and corporate governance (ESG) issues while also achieving its goal of capital appreciation.
A hedge fund of funds is a hedge fund that creates a portfolio from other hedge funds instead of investing directly in stocks or bonds. These “meta-funds” can be more diversified than other funds. However, hedge funds of funds often charge a higher fee than regular mutual funds, as they must make up for the expense fees charged by the portfolio funds.
Jerome de Bontin, President and CEO of Sustainability Investments LLC (SILLC) and Mekar Financial Services (Mekar) worked with Kenmar as an outside sustainability adviser in the make up of the Kenmar Eco Fund. SILLC will also take an active role in the distribution of the fund.
“A fund of funds can select asset management companies that are totally dedicated to a given market sector,” de Bontin said. “For instance, renewal energy covers many different industries such as wind, solar and fuel cells. The fund of funds will select experts in the industries that are economically promising while staying out of the least profitable ones.”
“Managing portfolios within the framework of social and environmental sustainability is quickly becoming a distinct driver of economic success in the near term while simultaneously promoting important longer-term global ecological and societal goals, ” Moros added.
Certain tax-exempt US and non-US investors can invest in Kenmar’s funds, with a number of limitations. Kenmar is primarily targeting institutional investors with a minimum investment of $5 million.
“Global Eco Fund brings a new dimension to SRI and ESG investing,” de Bontin told Socialfunds.com. “It brings together the best traditional long-only asset managers with the best commodity hedge funds. Investments in commodities and raw materials are an integral part of the SRI and ESG movements, but are difficult to access via traditional mutual funds. Kenmar Eco Fund facilitates such investments.”
Kenmar’s eight-member Investment Committee, co-chaired by co-CIOs Marc Goodman and Ken Shewer, make investment decisions for this and all of the Kenmar funds, based on the recommendations of the Research & Risk Management Group.
Kenmar Global ECO Fund joins a small, but growing number of funds of funds available to SRI investors. The Good Steward Fund and Gabelli Asset Management Company are two hedge funds of funds that follow Catholic values. Winslow Management Company has an environmental hedge fund, while Green Cay Asset Management has four SRI hedge funds.