Bridgewater Associates is starting a sustainability venture that will be headed by Karen Karniol-Tambour and Carsten Stendevad. The world’s largest hedge fund, founded by legendary financier Ray Dalio, has appointed the two as co-chief investment officers to jointly lead the initiative.
The two investors will design investment strategies for clients who are doubling down on environmental, social, and governance (ESG) issues, Bridgewater said Wednesday. The initiative has started just as sustainability has become crucial to understanding fiscal and monetary policies around the world, as well as capital flows and investor behavior, the firm added.
“It is an increasing priority for our clients to achieve financial goals as well as have environmental and social impacts in their portfolios,” Bridgewater CEO David McCormick said in a statement. “With Karen and Carsten, we are deploying some of our leading investment talent and the power of our systematic investment approach to address these challenges.”
Where appropriate, the venture will incorporate sustainability considerations into Bridgewater’s investment processes, the fund said.
The Westport, Connecticut-based hedge fund managing $150 billion in assets is also creating a new sustainable investing committee that will be co-chaired by Karniol-Tambour and Stendevad. Karniol-Tambour will still remain a member of the hedge fund’s main investment committee.
Karniol-Tambour was previously the head of investment research at Bridgewater, where she has been for the past 14 years. The macro investor has stressed that social and governance issues will be more important in investors’ portfolios because of the greater role that fiscal policy is playing in today’s markets over monetary policy.
In a panel hosted by the Conference of Montreal last year, she reasoned that fiscal policy “is inherently distributional, it’s inherently social, it’s meant to be choosing who will be receiving what” and will hold greater sway in investments as interest rates across the world continue to be held near zero.
“We’re seeing fiscal policies play the biggest role they have in economies basically at any time in recorded history over COVID, and that’s likely to be the norm rather than the exception going forward,” Karniol-Tambour added.
Prior to joining Bridgewater in 2017, Stendevad was the chief executive officer at ATP, Denmark’s national pension plan. The allocator managed $154.7 billion in assets at the end of last year.
While at ATP, Stendevad stressed the importance of quality sustainable investments. “We are clear that our approach to incorporating ESG factors must never sacrifice returns. We would never trade return for a better ESG profile,” he said in a 2016 interview with research firm FCLTGlobal.
Stendevad also oversees the Bridgewater’s China business.
The sustainability venture will also retain Daniel Hochman as head of sustainability research and Lauren Hardardt as chief operating officer.