NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, May 21, 2014

OK, so you’re a fund that supports microloans for education, and we like that. But what percentage of those loans are awarded to women? How many help people who are the first generation of their family to attend college? How do the loans improve access to education for those in rural areas? What follow-up is there with recipients afterwards?

These are the kinds of questions AXA Investment Managers are asking fund managers as the company’s Responsible Investment team builds a fund of funds for its parent company, AXA Group. At play is 150m euros ($208m) in AXA Group assets.

The AXA Impact Investment Initiative, which launched last September, is unusual in several ways.

It is one of relatively few socially-focused “funds of funds”. A fund of funds is a portfolio of investment funds rather than direct investments in stocks, bonds or other financial instruments.

“A fund of funds helps to pull together small pools of capital and make them large,” said Lloyd Kurtz, faculty co-chair of the Moskowitz Prize for socially responsible investing at the University of California Berkeley.

“That’s something the [impact investing] industry needs. There aren’t too many of them out there.”

But Kurtz said that while impact investing has expanded its role in the market, there have been a limited number of asset classes involved – particularly private equity, venture capital and hedge funds.

“It’s been difficult to have critical mass needed to have credible social investment offerings,” said Kurtz, who is also the chief investment officer for Nelson Capital Management. “In that sense [the AXA initiative] is an interesting step.”