Impact Investing Awaits Rise of Asia’s Young Rich
Friday, November 4, 2016
Socially responsible and impact investing is gaining traction in Asia but a leading Swiss private bank argues it won’t flourish until younger generations are handed control of the fortunes of the region’s wealthiest families.
Lombard Odier expects more of Asia’s wealth will be funneled into impact and socially responsible investment (SRI) as control shifts to younger family members who believe they can invest in worthwhile causes and generate at solid return at the same time. “The millennials are much more interested in it than their parents were,” points out Vincent Duhamel, Lombard Odier’s head of Asia. “Once dad’s given up the controls or he’s no longer able to control the wealth of the family, and the kids take over – they tend to go much more for an impact investing standpoint.”
Duhamel says the bank is having more conversations with high net worth individuals (HNWIs) in Hong Kong and across Asia aged between 30 and 40 years old. Previously, SRI investing had been dominated by big institutional investors like European and Canadian pensions funds, he says. “Before there was always a perception that it meant you had to accept a lower return,” Duhamel believes. “But you might even get better returns in future as more regulations force investors into this space.” An example of regulation affecting SRI is an exclusion list brought in by Dutch regulators three years ago that stops institutions investing in cluster bombs.