For many of us investing comes down to one thing: financial returns. But did you know there are investments that help you meet your financial goals and reflect your personal values?
Impact Investments combine these two attributes. Impact Investments are defined as investments that intend to generate social and/or environmental impact and at the same time are expected to generate a financial return on capital. Financial returns can range from below market (sometimes called concessionary) to risk-adjusted market rate. Importantly, both the financial return and social/environmental impact must be measurable, which helps ensure transparency and accountability.
You can make Impact Investments in developed and emerging markets. Impact Investments are available across asset classes such as: debt, equities, foreign exchange and real estate. There are managed funds that devote their entire portfolios to impact investments. And you can use impact investments to make a positive impact in anything from clean energy to education, from social housing to improving lives of the disabled, among many others.
Impact investing is not about philanthropy. By harnessing the power of investor capital Impact Investing seeks to make a bigger difference to the problems impacting society, but at the same time it has the intention of providing the investor with a financial return on the money they have invested. It is because of that reason Impact Investing can form part of any diverse investment portfolio.
David has worked in financial markets for the last 17 years, both as a trader and a journalist. He began trading forex at Japanese bank Sanwa, before dealing in equities with Abbey where he became a registered representative of the FSA and gained his CF30 qualification. For the last 9 years he has worked as a journalist for the BBC, and Reuters writing cross-asset financial analysis and currently write for impactinvestor