Social Impact Investing

Pension Funds and Other
Institutional Investors
Pension funds and other institutional investors
are normally bound by strong fiduciary duties,
limiting their ability to play in Impact First investments.
Although generally confined to Financial
First investments, these investors have a multitude
of options available to them for achieving
market-rate return Impact Investments. From
direct investments through to investments in
numerous funds, pension fund managers have
the ability to put together a diversified portfolio
of Impact Investments. TIAA-CREF in the
United States is one example of this new opportunity
for market-rate Impact Investment,
having committed more than $600 million to
Impact Investments across asset classes (from
cash to debt to private equity) that comply with
fiduciary responsibility regulations. Layered
structures also give these investors further
opportunities to meet their fiduciary responsibilities
while achieving various impact targets.
Ultra High Net Worth Individuals
Ultra high net worth individuals and family offices
typically have greater flexibility in their
investment mandates. Without the same level
of fiduciary duty as many other types of investors,
these investors can invest across different
asset classes. The Impact Investment space
allows these investors to pick multiple strategies
for their investments. They, like pension
funds, can look to maximise returns through a
diversified Financial First platform. Or they can
choose a particular social or environmental mission
they wish to undertake, allocating a part
of their investment portfolio to sub-market rate
Impact First funds targeted at their preferred areas
of social/environmental impact. Given their
flexibility, family offices were instrumental in
pioneering the early commercial investment vehicles
in microfinance and are proving similarly
influential in seeding the rapidly growing field of
Impact Investment funds.
High net worth individuals
and family offices typically
have greater flexibility in their
investment mandates.
Pension funds and other
institutional investors are
normally bound by strong
fiduciary duties, limiting their
ability to play in Impact First
investments.
8
Investing for Impact: Case Studies Across Asset Classes