Impact investing while targeting risk-adjusted market rate returns through real assets and in private markets

The research uncovers insights into impact investing decision-making and the financial performance of impact investments targeting risk-adjusted market-rate returns. It finds impact investors are applying a multi-dimensional approach considering impact objectives and impact risks alongside traditional factors such as financial return, financial risk, resource capacity, and liquidity restraints. Impact investors are approaching performance and capital allocation with increasing sophistication, considering various facets that influence performance to maximize outcome efficiency, to achieve both financial and impact objectives, marking signs of a maturing industry. Analyzing the financial performance of impact investments, through various asset classes like private debt, private equity, and real assets, the results demonstrate that financial performance varies significantly based on asset class and the diverse set of objectives that impact investors pursue. An important conclusion is that risk-adjusted, market-rate returns can be achieved through impact investments, contingent on asset manager selection and investment strategy. A key finding is that impact debt funds are especially important for risk mitigation and diversification.

The fill report is available in the ‘Publications Tab’ at https://www.multiassetanalytics.com/publications or at The Global Impact Investing Network (GIIN)