OPINION: Impact investing here to stay
Tuesday, May 27, 2014
Financial advisers need to resist the urge to roll their eyes when the issue of impact investing comes up in conversation — because the topic is likely to arise more often and is becoming more important to more clients.
Historically, institutional investors — particularly European pension funds — have led the charge in aligning their investment dollars with their values. But over the last few years, individual investors have jumped on the bandwagon in a big way.
According to J.P. Morgan Securities and the Global Impact Investing Network, a group of 125 impact investors that the firms surveyed committed $10.6 billion in impact investing last year and plan to increase that by 19% this year, to $12.7 billion. That’s hardly pocket change.
Within that group, retail investors, high-net-worth individuals and family offices made up 32% of impact investors. Pension funds and insurers made up 22%. The rest is derived from foundations, banks and other financial institutions.
Over the past few years, each of the four wirehouses has developed impact-investing platforms, while opportunities have risen notably through mutual funds that invest in companies focused on producing measurable social impact as well as financial returns.