NB Financial Innovation
An Eventful Year in Impact Investing – An Interview with ImpactAssets’ Fran Seegull
2015 was a big year for impact investing – one that saw it take some crucial steps toward the mainstream. We spoke with ImpactAssets’ Chief Investment Officer and Managing Director Fran Seegull at the 2015 SOCAP conference about these changes and what they mean for the sector.
Among the many milestones she pointed to were high-profile market entrants like BlackRock and Bain Capital, alongside wealth advisor incumbents like JP Morgan, Morgan Stanley and Merrill Lynch. Encouragingly, she said, these venerable firms have entered the market in part because clients are asking for impact investing solutions. And in another promising sign for the sector, Goldman Sachs purchased Imprint Capital, a pure-play impact investing registered investment advisor. “We really see that acquisition as a signal to the field that the incumbent players are taking the movement of impact investing really seriously,” she said. “The mainstreaming of impact investing is happening both for high net worth individuals and institutions, as well as retail investors.”
Seegull and her organization are particularly interested in this democratization of impact investing to the average investor – ie: “how retail investors can get exposure to impact through cash, through the public markets, mutual funds, and select private offerings.” ImpactAssets, a non-profit financial services firm focused on increasing the flow of capital to impact investing, has made this goal a major focus of its work. It runs a $250 million donor-advised fund that is invested across asset classes, and it is bringing to market two impact securities, one focused on microfinance, and the other on global sustainable agriculture, which are designed to broaden access to impact investing. According to Seegull, “Typically, to gain access to private debt and equity fund managers, you need to stroke a check of $250,000, half a million dollars, or even more, and you need to be an accredited investor or even a qualified investor, and that’s outside the reach of many investors, both retail and high net worth, as well as institutions. And so these products are designed to increase the flow of capital to impact investing by lowering minimums – so they’re literally an on-ramp into impact investing, on a thematic basis, for a broader range of investors.”
As Seegull describes it, the coming year is also likely to be a big one – for her organization, and for impact investing at large. “Our goal for 2016 is to scale the donor advised fund … and to deepen our impact by continuing to allocate to innovative public mutual funds and private debt and equity funds, as well as individual deals,” she said. As for the broader sector, she looks forward to the continued development of “tools and techniques to measure not only financial returns, but also impact returns” along with “a rising bar for metrics measurement and reporting … with companies and fund managers bringing an increasing level of discipline to measuring and reporting those metrics for a variety of stakeholders.” On the financial side, she expects to see impact fund managers who are bringing to market second, third and fourth vintage funds – with some of them generating returns that compare quite favorably to traditional investments. “For certain types of vintages, for smaller funds, for emerging market funds, and interestingly for funds focused on Africa, it seems that the impact investing venture firms actually outperform the incumbent examples on the financial side,” she said.
In this interview, Seegull also discussed some trends and obstacles that could complicate the sector’s growth in 2016, and explained the driving forces that are pushing the sector toward the mainstream by “creating an imperative to align our investment portfolios consistently with our values.” You can view our conversation in the video below.