Impact investing is a relatively new concept that has been gaining popularity in recent years. The idea behind impact investing is to use investment dollars to generate both financial returns and societal impact. Investors who are interested in impact investing are often looking for ways to “do good” with their investment dollars, while still earning a return on their investment.
One of the key concerns for investors considering impact investing is the idea of exit. Unlike traditional investments, which are often focused on short-term financial gains, impact investments are meant to be held for the long term. This can make it difficult for investors to exit their investments when they need to. However, there are now exit frameworks being developed that can help investors navigate this issue.
Another concern for investors is financial performance. Many investors worry that impact investments may not perform as well as traditional investments, but the evidence suggests otherwise. In fact, studies have shown that impact investments can perform just as well, if not better, than traditional investments.
Hedge funds are also getting in on the action, with a growing number of hedge funds now specializing in impact investing. These funds are focused on generating both financial returns and societal impact, and they are attracting a lot of interest from investors.
There are also a number of organizations that are working to promote impact investing and provide resources for investors. One such organization is the Global Impact Investing Network (GIIN), which is dedicated to promoting impact investing and supporting investors who are interested in this area.
Interest in LGBTQ+ investing is also growing, particularly among younger investors. This is due in part to generational shifts in wealth and the increasing demand for asset managers to meet this demand.
When it comes to impact investing, it is important to remember that it is a both-and argument, not an either-or one. This means that investors can generate both financial returns and societal impact, rather than having to choose between the two. As Meredith Shields, Managing Director, Global Head of Sustainable Investing at J.P. Morgan Asset Management, notes, “You can do well by doing good.”
The narrative around portfolio companies and investor interest in environmental, social, and governance (ESG) has predominantly been focused on large-cap companies. However, there is growing interest in ESG investing in the mid- and small-cap space as well.
The Ruth Mott Foundation is one organization that views impact investing as a tool to advance racial equity, strengthen north Flint neighborhoods, and create opportunities for residents. The foundation has invested in a number of impact-focused initiatives, including affordable housing, small business development, and community revitalization.
In conclusion, impact investing is a growing trend that is attracting interest from investors around the world. By balancing financial returns with societal impact, investors can generate both positive financial and social outcomes. With the right frameworks and resources in place, impact investing has the potential to revolutionize the world of finance and create a more sustainable and equitable future for all.
