Earlier this week, Bloomberg ran a story about the rumored creation of a $500 million investment fund to belaunched by Generation Investment Management, the socially responsibleinvestment firm co-founded by Al Gore. If true (which seems to be the case since Generation has not publicly denied the story), itwould be the single largest investment fund to target Asia with asocially responsible mandate.
Generation Investment Management, which Gore co-founded in 2004 withDavid Blood, a former head of asset management at Goldman Sachs, isheadquartered in London with offices in New York and Sydney. Over the past several years, they have quickly emerged as a major player in the socially responsible investment space. In 2008, they closed their flagship Global Equity Fund to new investors after successfully raising $5 billion dollars in assets. This strategy invests in a concentrated portfolio (approximately 30-50individual positions at any given time) of publicly traded globalcompanies.
In 2007, Generation launched a second strategy, the Climate Solutions Fund, which is more of a pure play into the green energy space. The fund targets both public and private equity opportunities, focusingalmost exclusively on small cap energy companies engaged in helping theworld transition from a high-carbon to a low carbon economy. According to the website, this fund has selected four main sectors within the alternative energyspace for investment: renewable energy generation and distribution,energy efficiency and demand destruction, carbon markets andclimate-related financial services, and solutions for the biomasseconomy. This fund also was also closed in 2008 after successfully raising $683 million in capital from investors.
The Asia Fund, like the Global Equity and Climate Solutions fundsbefore it, will likely follow a strict investment philosophy mandatethat "integrates sustainability research into a rigorous traditionalinvestment process in order to deliver superior long-term results." Like several other socially responsible investment managers in the space,Generation subscribes to the view that companies which effectivelyconfront sustainability factors now will outperform those companieswhich do not, particularly in the long term.
While performance data for the funds is not publicly disclosed,according to Bloomberg, in an annual report filed by one of Generation’s institutional investors, the UK Environment Agency’s pension fund, theGlobal Equities fund outpaced its benchmark index (the MSCI World Index) by 10% in the 12 month period ending in March 2010. Thisdata, while certainly a small sample size, is particularly impressivegiven the fact that the index was up 47% over the same period.
So how does one invest in Generation’s Funds?
Currently, their funds are closed to new money and are only available to institutional and/or high net worth investors. It remains to be seen whether or not Generation decides to open up theirstrategies to smaller investors through a mutual fund offering. If they do decide to go in this direction, it’s safe to say theirprospects certainly won’t be hurt by having the world’s foremost SRIpitch man in their corner.
Louis is a Justmeans staff writer on the topic of Finance & Investing where he covers trends in the sociallyresponsible investment space.He is co-founder and principal of Washington Square Capital Management, a NYC-based independent investment advisory firm with a focus on socially responsible investing. His clients include individual investors,businesses and institutions.Prior to founding WSQ Capital, Louis worked as a Financial Advisor inthe US Wealth Management division at UBS in New York.He holds a Series 66 securities license, a New York State Life andHealth insurance license, a BFA from New York University and a MFA fromNew School University.