Innovest’s Kiernan unveils new venture

London, 4 February: Sustainable investment pioneer Matthew Kiernan is launching an asset management company, Inflexion Point Capital Management, in partnership with Legg Mason and Phoenix Global Advisers.

In an exclusive interview with Environmental Finance, Kiernan – founder of environmental, social and governance (ESG) investment research specialist Innovest Strategic Value Advisers – said the new venture will launch a suite of “ESG-enhanced” investment products, which he expects to be operational by the fourth quarter of this year.

“This is very much a combination of things I’ve been thinking about for a long time,” he said. “In my Innovest days, we designed sustainability-fuelled investment products. The financial returns were very good, but economically it was not a good arrangement for us.”

Innovest had offered sustainable investment products through State Street Global Advisors and JP Morgan, but they failed to take off. “It wasn’t a very efficient transmission of our ideas,” Kiernan said.

Initially, Inflexion will roll out equity, fixed income and alternatives funds, “but ultimately we will cover all asset classes”.

Kiernan said the investment philosophy is close to those pursued by Generation Investment Management, the $6 billion asset manager run by Al Gore and David Blood, and Switzerland-based SAM, with $13 billion under management. Both use sustainability research to attempt to outperform the wider market. “However, I’m confident that there will be significant differentiation” between those incumbents and the new firm, Kiernan added.

He did not give a target for assets under management, but said: “We’ve had a couple of promising discussions with some major asset owners.”

The venture will use investment management firm Legg Mason’s trading platform and legal, regulatory and compliance infrastructure. Inflexion will run offices in Toronto, Chicago, London and Sydney, and Kiernan said it will boast 18 staff, including some lent by the venture partners. Andy White, formerly managing director of research at Innovest, will be in charge of global research at Inflexion, alongside a number of other Innovest analysts.

Kiernan founded Innovest in 1994, and sold the company to RiskMetrics last year for $16 million. Kiernan stayed with the New York-based risk management service provider for just six months, before resigning last October.