Wealth Strategies

Impact Investing Fund Says Has Hard Proof Of Changing The World

Tom Burroughes, Group Editor, London, 22 May 2017


A fund adopting the impact investing stance says it has proof of both changing the world for the better and putting investment returns on the table.

WHEB Asset Management, a UK-based firm focusing on the growing field of “impact investing”, has reported new data it says demonstrates that this way of making money really improves society and the environment, while delivering solid financial numbers.

The firm commented on performance of its FP WHEB Sustainability Fund, saying its investments have helped to avoid 1,600 tonnes of greenhouse gas carbon dioxide entering the atmosphere; diverted 140 tonnes of waste from landfill sites and treated 1.6 million litres of waste water for each £1 million ($1.3 million) invested. Assets under management rose 51 per cent last year, reaching £124 million. As at the end of April, AuM was £154 million, WHEB said in statement late last week.

The fund, structured as an open-ended, UCITS vehicle, was launched in June 2009; from inception, cumulative performance on its A shares, as at the end of April this year, is 86.67 per cent, while on its C-shares, the result is 92.47 per cent. Those results compare with a 101.58 per cent result for the MSCI World Total Return Index, according to a factsheet issued by WHEB. The fund is classed as a “global growth” fund by the UK’s Investment Management Association. As at the time of its latest update, the fund had 62 holdings; average holding period is three to five years. In the year to date, on it’s A shares, for example, the fund has beaten the MSCI index, with a cumulative performance of 6.06 per cent, almost twice the benchmark.

“Investors of all types are increasingly interested in the purpose and impact their investments have on the world. The WHEB Fund is solely focused on companies providing solutions to sustainability challenges and this report builds on WHEB’s leadership in measuring and communicating the extent of this positive impact. We would encourage all investors, from the largest pension fund to the individual investor, to ask their advisors and asset managers for information on the impact of their investments,” George Latham, managing partner and chief investment officer, said.

The impact report from the fund manager is, it says, one of the first in the world to incorporate climate-related issues in financial information, adopting a Group of 20 nations-backed system known as Task Force On Climate-Related Disclosures, or TCRD.

“For too long investors have blamed a lack of standardised climate information as a reason for not taking climate risk into account in their investment decisions. TCFD will remove that excuse, so we encourage all investors to embrace this reporting framework,” Latham said.

The fund management house has set out arguments for why this style of investment can deliver genuine market-beating "Alpha" here.

The impact investing field has become increasingly visible as a wealth management talking point, tapping into a desire among high net worth individuals to use their wealth to improve the environment, tackle poverty and poor education, and other objectives. The process is, its practitioners argue, not at odds with hard-nosed pursuit of investment returns because investing for "good" equates to smart practice anyway. 

According to recent data from the Global Impact Investing Network, a pan-industry group gathering data on the sector and prosletysing about the investment model, it said in a study covering an array of groups including wealth managers and family offices that investors intend to boost capital to this style of asset management by 17 per cent this year, reaching $25.9 billion this year, covering 9,557 deals. 

Among details of the GIIN report, it showed that there have been an "increasing number of large, well-known asset managers and other financial firms entering the impact investing space". In 2015, for example, the world's largest listed asset manager, BlackRock, said it was throwing its weight behind the impact investing space. Goldman Sachs and Bank of America are involved in areas such as social impact bonds; banks including UBS have created impact investing funds. The arrival of large firms will "help professionalise the market, bring in much-needed capital, and enhance the credibility of impact investing", the report continued, but there is the risk that arrival of prominent players will cause "mission drift" - in other words, that the original idealism of impact investing will be undermined in a chase for returns.

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