Impact investing: playing the long game
Impact investing, or picking companies which prioritise social and environmental improvements alongside financial gains, is growing in popularity. But before prospective investors commit their money to an impact strategy, they should ponder two key questions: can the strategy beat wider market returns and will it appeal in a financial downturn? We’ve attempted to answer those questions and provided our three favourite funds in the impact space.
Philanthropists donate money to improve the welfare of others. Investors provide companies with money in the hope that they will share in their growth. Impact investors sit somewhere in between. Sceptics might say that most impact investors are closer to the investment end of the spectrum than the philanthropy (after all, their ultimate intention is to make money), but it’s also hard to deny that their intentions are good: the purpose of impact investing is “to create positive impact beyond financial return.” True impact investors consider social and environmental growth to be just as important as financial performance.
In the past, mainstream institutions or private investors have feared this speculative terrain, leaving adventurous venture capitalists or charities to provide the capital necessary for innovation in environmentally or socially pioneering ideas. But more recently, environmental, social and governance (ESG) investing has gained popularity and impact investing has been swept up with the demand.
Impact investing is forecast to grow to more than $300bn…
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