Impact Investing Shows Tidy Profits, New Report Says


12 Best Small Cities for Successful Aging: 2017

10 Most Tax-Friendly States for Retirees: 2017

13 Best & Worst Broker-Dealers: Q3 Earnings, 2017

Impact investing is capturing the attention of investors across the world. Last year, 209 leading impact investors committed $22 billion into nearly 8,000 impact investments, and planned to increase capital invested this year by 17% and the number of investments by 20%.

Throughout the industry’s development, however, some investors have questioned the ability of impact investments to generate financial returns similar to traditional investments, and lack of data has left this question unanswerable.


Now a new report from the Global Impact Investing Network looks to recent research that it says has shed valuable light on what are appropriate and achievable financial performance expectations.

This research shows that impact investors that target market-rate returns can achieve them. Across the three largest asset classes in impact investing — private debt (34%), real assets (22%) and private equity (19%) — the distribution of fund returns is similar to those in analogous conventional markets.

According to the report, these fund managers pursue a variety of impact themes, among them financial inclusion, access to clean energy, sustainable timber and low-income housing.


The research also shows that performance varies considerably among funds, as it does in conventional markets. The implication: fund manager selection is key to achieving robust returns.

One important aspect of impact investing, often overlooked by critical observers, is that not all impact investments seek to achieve market rates of return. Some impact investors intentionally target below-market returns given the nature of their strategies.

According to the research examined by GIIN, these so-called concessionary impact investments can be a sustainable funding source for impactful organizations historically reliant solely on grant funding.


The research further shows that many impact investors take a portfolio approach to building an impact investment strategy across multiple asset classes in order to meet their overall risk/return preferences.

GIIN’s report emerged from a synthesis of findings across more than a dozen studies on the financial performance of investments in private debt, real assets — including timber, real estate and infrastructure — and private equity, as well as individual investor portfolios allocated across asset classes.  

In addition, the report summarizes portfolio-level performance from five impact investing organizations that have publicly released their own financial performance data.


The studies examined by GIIN were produced by a wide range of organizations, including Boston Consulting Group, Cambridge Associates, EngagedX, Impact Investing Australia, McKinsey & Company, Symbiotics, Wharton Social Impact Initiative and GIIN itself.

“Increased transparency around financial performance will enable current players to make more informed portfolio allocation decisions, allow new players to more confidently develop market entry strategies, and allow both to set well-informed performance expectations and more accurately evaluate performance,” GIIN Research Director Abhilash Mudaliarsaid in a statement.


“To continue to advance and exponentially scale the industry, active impact investors and other field-builders need to embrace an openness to sharing data on the financial and impact performance of their investments, either directly with the public or by contributing to third-party research.”

The report identifies gaps in current financial performance research and suggests that future analyses should include the following:

You are signed up!

ThinkAdvisor and the College for Financial Planning have partnered to bring you a series of helpful educational tools that you can use to take your career to the next level. width:300px!important;max-height:36px; ThinkAdvisor TechCenter


ThinkAdvisor’s TechCenter is an educational resource designed to give you a competitive edge by keeping you abreast of new tech innovations and need-to-know information that can be applied to your business. padding: 0px;width: inherit; ETF & Smart Beta Research ETF & Smart Beta Research

A survey of advisors nationwide reveals how the use of ETFs is expanding and what factors are likely to further support this trend. padding: 0px 81px;width: inherit; Retirement Wire Retirement Wire


Your resource for news, research and analysis to help you deliver more effective outcomes to your clients. Resources How Factors Influence Equity and Fixed-Income Returns

Looking at securities through the lens of factors

New advisor survey results spotlight disconnects.

Many of the old stereotypes of emerging markets no longer fit.

Join this webcast to see how Trisha Qualy, Director of Wealth Management at AdvisorNet Financial, took client assets from $100 million to $1.3 billion in…

Join this complimentary webcast to learn innovative strategies that have proven effective in containing rising health costs.

Join this conversation as a panel of experts provides tips and best practices to optimize your tech resources for business growth.

Leave a Reply

Your email address will not be published. Required fields are marked *