Impact Investing Resonates with Investors
Last week, while guest-hosting on behalf of Jeremy Schwartz, I had the pleasure of speaking with DeAnne Steele, Head of National Portfolio Management and Consultancy Practice with U.S. Trust. She brought a wealth of both experience and passion to the concepts of impact investing and looking at making investments with sensitivity to the gender lens.
The critical theme: clients want to do good while also doing well. Some highlights that Steele brought to light include:
On Impact Investing Broadly:
• Assets under management related to sustainable, responsible and impact investing (SRI) rose from $6.57 trillion at the start of 2014 to $8.72 trillion at the start of 2016, a growth rate of 33% over that two-year period and a total that represents about one-fifth of all professionally managed U.S. investments.1
• Wealthy investors believe that they make an impact in a variety of ways, as studies have shown that 74% give financially to nonprofit organizations, 69% volunteer their time, skills or service, 27% serve on the board of a nonprofit organization or foundation, 17% invest in companies that support positive social and environmental policies and practices, 14% own a company that creates jobs and opportunities for others, 13% work for a nonprofit organization, and 7% engage in social entrepreneurship (i.e., own a company to provide social or environmental solutions).2
• Advisors are also cognizant of how impact investing can help bridge the generational divide and build connections with millennial investors.
• Steele emphasized that a factor that could contribute to the ultimate success of these types of investment approaches is how it further aligns the thoughts and feelings of clients with the success of their portfolios. The depth of the client relationship and an understanding of their values was of the utmost importance.
On Investing through the Gender Lens:
• Today, women represent 5.4% of chief investment officers, 25% of executive/senior level officials and managers, and one fifth of board members.3 Women in 1960 earned an average of 60 cents to every dollar men earned; in 2016, they made approximately 80 cents.4
• Notably, over a five-year period (2011–2016), U.S. companies that began the period with at least three women on the board experienced median gains in return on equity (ROE) of 10 percentage points and earnings per share (EPS) of 37%. In contrast, companies that had no female director as of 2011 experienced median changes of -1 percentage point in ROE and -8% in EPS over the study period.5
• We also emphasized diversity beyond simply talking about gender, and Steele brought a lot of different ideas to light that truly contribute to an inclusive culture within both her firm and more broadly.
Listen to the full conversation:
1Source: “Report on U.S. Sustainable, Responsible and Impact Investing Trends,” US SIF (Forum for Sustainable and Responsible Investment), 2016.
2Source: 2017 U.S. Trust Insights on Wealth and Worth Survey.
3Source: “Women in S&P 500 Companies,” Catalyst.org, 2017.
4Source: Census Bureau reports and data, 2016.
5Sources: “The Tipping Point: Women on Boards and Financial Performance,” MSCI ESG Research LLC, 2016; “Diversity Matters,” McKinsey & Co, 2015.
Christopher Gannatti began at WisdomTree as a Research Analyst in December 2010, working directly with Jeremy Schwartz, CFA®, Director of Research. In January of 2014, he was promoted to Associate Director of Research where he was responsible to lead different groups of analysts and strategists within the broader Research team at WisdomTree. In February of 2018, Christopher was promoted to Head of Research, Europe, where he will be based out of WisdomTree’s London office and will be responsible for the full WisdomTree research effort within the European market, as well as supporting the UCITs platform globally. Christopher came to WisdomTree from Lord Abbett, where he worked for four and a half years as a Regional Consultant. He received his MBA in Quantitative Finance, Accounting, and Economics from NYU’s Stern School of Business in 2010, and he received his bachelor’s degree from Colgate University in Economics in 2006. Christopher is a holder of the Chartered Financial Analyst designation.