Beetle Capital plans fixed income ‘natural capital’ product

London,14 January: A new asset manager established by a founder of Climate Change Capital is planning a fixed income fund as its first sustainable investment product pursuing a “natural capital” theme.

Beetle Capital, a London-based firm co-founded by Gareth Hughes, this week announced the hire of Alex Veys, a 10-year veteran of fixed income giant Fidelity Investments, where he was a portfolio manager responsible for $5 billion in bond funds.

“We’ve spent the last 12 months developing our ‘natural capital’ thesis … and on the back of that, we’re looking at strategies that will resonate with all sorts of investors,” Hughes told Environmental Finance.

Veys’ hire – which Hughes described as “opportunitistic” – means that Beetle will initially focus on a fixed-income product, expected to be launched in April or May. Veys has recently completed a masters degree in sustainable energy, during a career break.

Hughes added that the company intends to launch the fund with at least $100 million, “with the potential, with a good track record, to grow that significantly”.

The natural capital thesis – spelt out in a report published this week – seeks to incorporate in investment strategies the declining importance of oil, the electrification of transport, increased energy efficiency, resource constraints and the rising importance of water.

“Beetle’s natural capital investment prism shifts asset allocation from a focus on narrow or ‘gap’ verticals such as clean-tech or carbon to a holistic approach integrating water, agriculture, commodities and the energy complex,” the company said.

“We can overlay this thesis on the traditional portfolio construction of fixed income managers,” said Hughes. “The value added would be incremental initially, but the alpha would become self-evident over time.”

Beetle – which is currently 15-strong – is interviewing investment managers “across other asset classes”, with a view to rolling out a suite of products over the next 12 to 18 months, Hughes added. These include a private equity fund and a long-short public equity fund, according to its website.

Hughes – previously a managing director at insurance firm Marsh – was one of the four founders of Climate Change Capital in 2003. That company now manages more than $1.5 billion in a range of environmental investment products.