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ESG Fund Trounces Peers Helped by Bold Bet on Defense Stocks

  • Alken fund posts gain in year when most rivals report losses
  • Defense stocks are controversial stance for most ESG managers
A Starstreak Lightweight Multiple Launcher missile system at Thales weapons manufacturer in Belfast, UK.

A Starstreak Lightweight Multiple Launcher missile system at Thales weapons manufacturer in Belfast, UK.

Photographer: Liam McBurney/Getty Images

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An ESG fund run by Alken Asset Management Ltd. has outperformed 98% of its peers over the past year, helped by a bet on European defense stocks while they were still cheap.

The Alken Fund Sustainable Europe (ALCSEU1 LX) is up about 9% in the period, compared with an average drop of roughly 9% among similar funds, according to data compiled by Bloomberg. Aside from defense, which represents about 8% of the portfolio, the fund’s gains were driven by its exposure to energy and raw materials.