Man Group Plc, the world’s largest publicly traded hedge-fund manager, is seeing growth in client flows as a number of institutional investors in Europe reassign mandates based on sustainability criteria.
UK-based Man Group’s sustainable-investment offering tends to be “on the more complicated product solutions part of the spectrum and I think for that reason, frankly, we undergrew the market historically,” Jason Mitchell, the hedge fund manager’s head of responsible investment research, said in an interview. But “that now has changed for us.”
The comments come after Man Group, which oversees well over $200bn in assets, won a $13.2bn mandate from PFZW in September. The allocation was part of a broader adjustment by the Dutch pension fund, which reassigned a total of €54bn ($62bn) in external listed-equity management contracts. PFZW cited sustainability as a key factor, with BlackRock Inc. and hedge fund AQR Capital Management among firms losing mandates, Bloomberg has previously reported.
“It feels like a great time to be at Man doing responsible investing,” Mitchell said.
Sustainable investing is showing signs of emerging from a couple of rough years, with clean-tech stocks in particular enjoying a rally. But the strategy remains divisive as financial professionals face a fragmented political backdrop.
In the European Union, climate and diversity goals are enshrined in law and major pension investors have shown they want their portfolios to reflect that reality. At the same time, regulations are being wound back amid concerns they’re anti-competitive.
In the US, banks and asset managers need to navigate ongoing political attacks on investment strategies that take climate or diversity into account. In Norway, meanwhile, the parliament just voted to suspend work by the ethics council advising the country’s $2.1tn wealth fund.
As the politics of environmental, social and governance-focused investing have become increasingly fraught, some money managers have allocated fewer resources to monitoring risks. Firms that held on to their responsible investment experts, meanwhile, are now reaping the benefits, according to Mitchell.
While some managers have been “defecting or downsizing teams, we’ve been pretty consistent about investing in data and our quant capabilities and our research,” he said. “A lot of that is now starting to pay off.”
Man Group’s not alone in its assessment. Rob Genieser, managing partner of ETF Partners, says the asset manager is now planning a fifth fund focused on environmental technologies in 2026. He also says the sharp divide in policies on either side of the Atlantic suggests to him that “this is Europe’s moment.”
Sophie Flak, managing partner for sustainability and impact at Eurazeo SE, a Paris-based asset manager, says she’s hearing clients demand an investment horizon that’s longer than the political cycle. In private discussions, clients will say that “the Trump administration is here for four years, and the duration of our investment is seven to 10 years,” she said.
So clients say, “we need to adjust our narrative,” Flak said. “And the ones who are exposed to public funding or managing public funding are the ones who need most to adjust their narrative.” But investments must reflect reality, and ESG strategies take into account both “huge risk” as well as “huge opportunities,” she said.
Investors staying the course now find themselves able to outperform the wider market, in large part as renewables ride a wave of demand fuelled by the data centres powering artificial intelligence. The S&P’s main gauge tracking clean energy is up more than 50% this year, compared with about 16% for the MSCI World Index, roughly 20% for the Nasdaq 100 Index, and about 14% for the S&P 500 Index.
At Man Group, which says responsible investment-integrated assets accounted for more than $60 billion at the end of last year, the expectation is that the green rally will last. It’s been “fairly fundamentally driven,” said Albert Chu, a portfolio manager focused on natural resources at the hedge fund.
He says investors are realising that “whether it’s battery or solar or distributed grid, that these are becoming more real businesses.”
But he also emphasises the importance of remaining picky when choosing green stocks, likening this moment to the dot-com bubble of 2000. There was a market crash, but companies with solid business models survived and subsequently thrived, he notes.
“If you look at it from long enough time-frames, every cycle repeats itself,” Chu said. “There will be winners and losers.”