Warburg Invest AG and Alpha Centauri recently launched Climate Smart Europe Long/Short equity fund

Warburg Invest AG and Alpha Centauri recently launched Climate Smart Europe Long/Short equity fund

October 26, 2022

ESG-investing
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  • The fund relies on an equity strategy on European companies with approximately 60 stocks long and short
  • Stocks are selected along well-known factor premiums in combination with a low carbon factor
  • Low-carbon factor leads to an overall negative carbon footprint on equity strategy level
  • Largely neutral positioning on all major market risks will provide new diversification opportunities for investors
  • Strategy is implemented via Total Return Swap; underlying collateral will be invested in short duration corporate bonds
  • Fund is classified as an “Article 9” fund under the EU disclosure regulation

Since the 5th of August 2022, institutional investors are able to invest into the Climate Smart Europe Long/Short mutual fund (ISIN: DE000A2QMEK6), which contains a largely market-neutral investment strategy in European equities and tries to benefit from a transition into a more climate-neutral world.

“The stock selection follows a rule-based process in which the relative attractiveness is determined along a low-carbon factor and several well-known equity factor premiums such as momentum, value and size. The long leg is dominated by stocks of companies with low GHG emissions and positive factor characteristics, while the short leg contains stocks with high GHG emissions and low factor values.

Moreover, all major market risks such as equity market-, sector-, interest rate- or credit risk are broadly neutralized,” says Ulf Füllgraf, Managing Director of Alpha Centauri Investment Management, the initiator of the Climate Smart Europe LS. "In addition to the desired strategy performance from relative developments of long to short leg, the strategy achieves an aggregated negative GHG footprint on average,” he further explains.

"With the UCITS-compliant mutual fund Climate Smart Europe LS, we offer investors, who strive for a reduction in CO2 emissions and from a change towards a more climate-neutral world, access to a market-neutral, low-volatility, sustainable strategy. Short selling within the equity strategy aims to put pressure on the cost of capital of those companies, which are making only limited progress on the path to zero emissions.

As the strategy is implemented via swap, we ́re investing the collateral of the fund in a sustainable way as well by taking other sustainability criteria like “governance” into account. Exclusions of coal, petroleum and nuclear power also contribute to a lower-than-average carbon footprint on the fund level,” says Dr. Dirk Rogowski, Board Member of Warburg Invest AG.

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