Putting the Impact in Impact Investing

The latest iteration of impact investing is about to change. There are new strategies being created that you’ll want to read about in this post.

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Putting the Impact in Impact Investing

Putting the Impact in Impact Investing

One of the dominant trends in the investment management industry has been the growth of impact investing.

As important as capital allocation may be to effecting change, its impact can be somewhat intangible to the individual investor. It’s difficult to measure exactly what difference an investment in a solar firm, rather than an oil company, really makes.

The latest iteration of impact investing is about to change that. Now, individuals can invest in funds in which the fund’s asset manager makes direct contributions to a specified charity, thereby offering investors the means to make a more direct social impact with their investment dollars.

ETFs That Benefit Charities

There are several investment choices that make charitable contributions.

Impact Shares, a non-profit investment manager, has developed three exchange-traded funds in which the net advisory profits are donated to charity.

  • The NACP Minority Empowerment ETF seeks to track the Morningstar Minority Empowerment Index, an index comprised of U.S. companies with strong policies of promoting racial and ethnic diversity, and empowering employees irrespective of their race or nationality.

Net advisory profits are donated to the NAACP.

  • The Woman’s ETF mirrors the Morningstar Women’s Empowerment Index, which includes U.S. and international companies with strong policies and practices in furtherance of women’s empowerment and gender equality.

Net advisory profits are donated to the YWCA.

  • The Sustainable Development Goals Global Equity ETF tracks the Morningstar Societal Development Index, an index of companies committed to the United Nations’ Sustainable Development Goals and actively engaged in the world’s least developed countries.

Net advisory profits are donated to the UN Capital Development Fund.

Loncar Investments is another small ETF manager making charitable contributions. The money manager donates royalties it receives as the index provider to the Loncar Cancer Immunotherapy ETF in the amount of 2 basis points of that fund’s total assets.

Infrastructure Capital Advisor manages three ETFs:P InfraCap MLP ETF, InfraCap REIT Preferred ETF and Virtus InfraCap U.S. Preferred Stock ETF. Ten percent of the fund manager’s revenue is donated to Tutoring America, a non-profit dedicated to providing low-income students with tutoring services to help them catch up in math and English.

A Cautionary Note

Similar to any charitable donation, advisors and investors alike should do the appropriate due diligence on the charity to whom the fund manager is donating. Blackrock discovered this the hard way when it announced in early 2019 that it had entered into an agreement with the World Wildlife Fund (WWF) to make annual payments to further global conservation efforts. They later learned that WWF was facing allegations of arming militias and threatening violence against poachers.

See referenced disclosure (2) (3) at http://blog.americanportfolios.com/disclosures/ 

About The Author

Cliff Walsh, CFA

 

Vice President of Asset Management 
631.439.4600 ext. 277 

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