Would You Allocate Part Of Your Portfolio To Impact Investing?

By: ispeculatornew
Date posted: 09.15.2011 (5:00 am) | Write a Comment  (0 Comments)

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While we are not officially back in recession, it sure feels that way to a lot of people. In fact, figures are out and the poverty rate increased to a 17 year high, reaching 15.1% of the US population. As well, while the economy is still growing slightly, the median annual salary is down. Clearly, with Europe in an even worse situation, it becomes easy to forget a sad reality; that billions still live on just a few dollars per day.

In the past, I have discussed Socially Responsible Investing (SRI) that usually tries to pick companies that have social vocations. More often than not, SRI investing is about avoiding companies that encourage certain sins such as smoking, gaming, etc. The other day, I ended up tweeting by mistake the link to an interesting article about impact investing. One thing that I don’t love about avoiding certain industries is that there will always be other funds and investors that go buy those stocks so the difference that one can make is probably not as big as it could be.

Impact Investing A Nice Alternative?

However, this week I heard for the first time about impact investing which is intended to provide both a financial return and a benefit to society. How? There are numerous examples. If you have read at all about micro-loans for example, you know that those can make a significant impact on the life of those that are not as well off. How? Helping someone in Africa start a business for example by buying a phone, a computer, farming equipment, etc. Those are things that can make a big difference in many different ways. Personally, I think ventures such as micro-loans are incredible ways to jump start things in poor regions. Instead of simply giving goods and food, it encourages them to start something that can be much more sustainable.

Still In Early Stages

Unfortunately, it remains difficult to find impact investments that are easy to make. It’s a fairly new concept and a lot of such investments are being made by privately owned institutions and individuals. I do hope the concept will take off but it will certainly be a challenge for these companies to remain on top of things. Could private foundations such as the Bill and Melinda Gates Foundation help make impact investing available for the average investor? One way to do this would be to have ETF’s that would focus on impact investing.

What Are Your Thoughts On Impact Investing? Would You Invest?

More about Impact Investing

http://www.thegiin.org/cgi-bin/iowa/home/index.html
http://www.economist.com/node/21528678

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