Responsible investment pioneer Candriam nabs Rothschild alternatives as hedgies get ESG

Candriam, the Luxembourg-based asset manager with a strong focus on environmental, social and governance (ESG) issues, is taking over the €350m hedge fund business of Rothschild & Co Asset Management Europe.

The deal will include the alternative investment fund of funds business and a microfinance unit and will take Candriam’s hedge fund assets to €600m.

The transaction concerns open-ended funds domiciled in France and Luxembourg and dedicated institutional funds. Financial terms weren’t disclosed.

Under the agreement, Candriam will become the asset management company for the funds; Rothschild’s alternative multi-asset management teams will transfer to Candriam.

Candriam’s Deputy CIO Fabrice Cuchet said the move would enable Candriam “reinforce its value proposition”.

Candriam, the former Dexia Asset Management and now part of New York Life Insurance Company, is a fixture of the European ESG landscape, having been an early signatory to the Principles for Responsible Investment (PRI) in 2006. Its name means Conviction & Responsibility In Asset Management.

Just last month the firm launched an SRI Equity Circular Economy Fund to be managed by Koen Popleu and Monika Kumar.

Also in June it teamed up with the Grantham Research Institute at the London School of Economics on a three-year “Sustainability, Investment, Inclusion and Impact” initiative. It has also partnered with KEDGE Business School in France to create a research chair dedicated to sustainable finance.

A Candriam spokesperson said the incoming fund of funds have their own due diligence process in selecting third party managers, however “the funds are compliant with Candriam principles”.

For its part Rothschild is an investor member of CDP, as of 2019, and a supporter of the work of the Task Force on Climate-related Financial Disclosures (TCFD); it says it aims to assess the climate impact of its portfolios through scenario analysis.

It comes as hedge fund group Marshall Wace is reportedly planning to raise $1bn for a new ESG fund.

The new offering would buy stocks with strong ESG characteristics and bet against ones with poor ratings, the Financial Times said, citing people familiar with the plans although it said the firm declined to comment.