In the world of investments, there is a growing trend towards impact alpha investing - a strategy that seeks to generate financial returns while also making a positive impact on society and the environment. This approach goes beyond traditional financial metrics to measure success, focusing on creating a more sustainable and equitable world. One company at the forefront of this movement is OMFL, whose unique strategy has delivered strong returns over a multi-year period, but is largely in line with passive benchmarks.
Impact alpha investors believe in the power of capital to drive positive change. They look for opportunities to invest in companies and projects that align with their values and have the potential to make a real difference in the world. As Guy Kurlandski, Fund Manager at Liquidity Group's Opportunity Fund - Alpha with Certainty - Alternative Investment Fund, puts it, "What investors are seeing is the ability to create a new economy that is not extractive, that is more just."
To understand the performance of impact alpha investments, it is important to look at the concept of alpha itself. Alpha is a measure of the active return on an investment, relative to the return of a benchmark index. The formula for calculating alpha is: Alpha = R – Rf – beta (Rm-Rf) where R represents the portfolio return, Rf represents the risk-free rate of return, and beta represents the systematic risk of a portfolio.
In recent news, London-listed companies have been making strides in the realm of impact alpha investing. Aura Energy, for example, has announced updates that reflect a commitment to sustainability and responsible investing practices. This signals a growing awareness among companies of the importance of incorporating impact considerations into their business strategies.
Elena Manola-Bonthond, CIO of the CERN Pension Fund, sheds light on the fund's approach to investing in private markets. She emphasizes the importance of aligning investment decisions with long-term sustainability goals and the need to consider the broader impact of investments on society and the environment.
A recent survey revealed that health care is seen as the sector with the most upside potential in 2024. This highlights the growing interest in impact alpha investing within specific industries that have the potential to drive positive change and deliver strong financial returns.
In a significant development, SAP has joined a consortium of investors to support the series B round of GenAI developer, Aleph Alpha, with a total investment of $500 million. This demonstrates the increasing interest from major players in the investment space to support innovative companies that are driving positive impact through their business models.
According to a survey of institutional investors, 94% indicated that they plan to increase their holdings in impact alpha investments. This underscores the growing momentum behind this approach and the recognition of its potential to deliver both financial returns and positive social and environmental outcomes.
Overall, impact alpha investing is gaining traction as investors seek to align their financial goals with their values. By integrating impact considerations into their investment decisions, investors have the opportunity to not only generate strong returns but also contribute to a more sustainable and equitable future for all.
