The impact investment sector is currently estimated as more than $75 billion AUM, and the sector is growing at around $15 billion a year with industry estimates suggesting this could grow exponentially to $2 trillion, or 1% of global invested assets by 2025. By sector, the market shows up like below diagram.
The case of Guernsey
The predictions represent a significant global asset class. The net asset value of all funds under management and administration in Guernsey stands at approximately 250 billion pounds (US$325 billion) which represents 0.3% of the approximately US$80 trillion of global assets under management. This excludes assets within trusts, family office and philanthropic investment structures or other forms of direct investments, for which hard figures of Guernsey’s total AUM are not publicly available.
A survey by PwC showed that 76% of the participating CEOs indicate that business success isn’t only about financial profit anymore. However, for the one’s who are particularly interested in the financial returns of impact investments, Barclays has reported that the difference on return between for example ESG and normal financial returns have only been 0.4%.
Research has shown that impact investors have diverse financial return expectations. Some intentionally invest for concessionary returns in order to maximise impact or to catalyse additional investment capital by accepting a riskier position in a deal. Others pursue market-competitive and market-beating returns, some of whom are bound to do so by fiduciary responsibility. Eighty-nine percent (89%) of researched subjects reported financial performance in line with or better than their expectations, and 99% reported impact performance in line with or better than expectations.
On the above diagrams, financial returns of impact investments appear to be broadly in line with the comparative universe. Investor returns weighted across all MIVs have been of around 4%, and give stable and predictable absolute returns with low volatility and low correlation to mainstream markets.
– Impact survey by GIIN/ J.P. Morgan in 2016,
– Survey by Symbiotics Microfinance Investment Vehicles (MIV) in 2015,
– Cambridge Associates and Global Impact Investing Network, Introducing the Impact Investing Benchmark 2015
* This page is provided only for informational purposes. It does not constitute investment advice. Past performance does not guarantee future results. Investments and strategies discussed herein may not be suitable for all readers, so readers should consult with financial, legal, tax or accounting professionals before acting upon any information or analysis contained herein.