09 November 2017

  • Projects

Beyond Direct Deals – Finance in Motion supports pymwymic’s latest report on fund impact investing

Impact investing has developed very quickly over the past two decades – particularly in fund investing, which offers many benefits to give meaning to an investment and realize returns.

As a leading impact investing advisor to four impact funds, FiM’s expertise was called upon to co-author a report that looks at today’s opportunities to add to your impact portfolio through fund investing in addition to direct investments in impact enterprises.

Impact investing covers a full spectrum of financial instruments across all asset classes and an increasing number of investors is practicing full portfolio impact investing. So, what did the advisors and investors who have been around since the early days have to say about the benefits of fund investing? Here’s a few key takeaways from the report that should be of interest to future investors considering to incorporate impact assets in their investment strategy.

Investing in a fund brings a professional team of fund managers along with it, allowing investors new to impact investing to learn along the way from their expertise, and brings you into a large network of like-minded investors. It also allows for diversity in your impact portfolio, spreading your risk. Lastly, fund investing means efficient investing, where transaction costs are reduced due to economies of scale for due diligence and investment management.  

Pooled capital in a fund can realise greater impact and is more likely to help an entire sector: “To reach greater impact, our funds traditionally partner with local financial institutions in emerging markets,” says Sylvia Wisniwski, Managing Director at Finance in Motion. “These intermediaries make it possible to reach a variety of target groups, such as small businesses, agricultural producers, and households. We work with them to enter into new market segments, such as sustainable agriculture, and are thereby able to achieve systemic change.”

Some impact funds offer blended structures, through which you can pool capital from various investors with different risk profiles towards one goal. Finance in Motion-advised funds, for example, are structured as public-private partnerships and based on a multiple tier capital structure with participation of public investors, development finance institutions, private qualified investors and institutional investors. Final beneficiaries can also count on high impact technical assistance, which works hand-in-hand with the fund.

Lastly, for anyone just getting their feet wet with impact investing, important to remember is that impact funds target real returns – for people, planet and profits.

A full version of the ‘Beyond Direct Deals, How Fund Investing Adds to your Impact Portfolio’ report, authored by pymwymic, Finance in Motion and Triodos Investment Management was published on 24 October 2017. Read the full report here.