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The launch mid this October of the BlackRock Strategic Funds’ (BSF) Impact World Equity Fund, a liquid UCITS fund that aims to invest in “measurable” social and environmental outcomes, has been described as a new investment strategy will help move impact investing from a “niche to a core allocation.”
BlackRock, a global leader in investment management, risk management and advisory services for institutional and retail clients with assets under management (AUM) of US$4.721 trillion (June 30, 2015), is well known for its financial products including iShares (ETF’s) and mutual funds.
Now the new BlackRock fund, which will typically hold between 200 and 600 individual companies sits alongside other recently launched impact funds by the firm for US and Japanese investors, aims to generate “competitive financial returns” whilst meeting investors’ social and environmental concerns.
The fund’s launch comes as sustainable and impact investing strategies have been receiving a significant amount of interest and assets from investors. It should nevertheless be noted that ‘impact investing’ is a small but vibrant segment of the broader sustainable and responsible investing universe.
According to the Global Sustainable Investment Alliance (GSIA), a collaboration of sustainable investment organizations, sustainable investment assets expanded 61% between 2012 and 2014. It has defined impact investing as ‘targeted’ investments aimed at solving environmental or social problems.
Deborah Winshel, md and global head of impact investing at BlackRock, commenting said: “Demographic shifts, stakeholder advocacy, and government regulation are combining to create unprecedented demand for sustainable and impact investment solutions.”
She added: “Impact investing enables investors to do more with their money than simply achieving a financial return. Through transparent measurement and outcome reporting, impact investing allows investors to better understand how their money is being put to work.”
The latest fund, which is run by BlackRock’s Scientific Active Equity (SAE) team with over 30 years of experience leveraging systematic and quantitative techniques to build differentiated equity portfolios, seeks to deliver a portfolio that provides exposure to companies with a “positive measurable societal impact” whilst considering risk and returns.
SAE employs research processes to score more than 8,000 companies daily across three societal impact outcome areas: (1) Health; (2) Environment; and, (3) Corporate citizenship. In addition, the fund screens out certain companies or industries, including alcohol, tobacco and weapons manufacturers.
“This new investment strategy will help move impact investing from a niche to a core allocation,” said Jeff Shen, co-head of BlackRock’s SAE Investment Group. “We have designed a portfolio that combines innovative investing capabilities with a transparent and tangible set of social and environmental impact outcomes.”
The development of the new fund is claimed to further highlight BlackRock’s “commitment” in the space. The firm currently BlackRock manages in excess of US$200bn (c.£130bn/€175bn) of assets across environmental, social and governance (ESG) portfolios as well as impact investments.
GSIA’s research has also highlighted that while institutional investors currently account for 86.9% of global sustainable by AUM, increasingly women and millennial investors are placing a greater emphasis on sustainability and social impact in their investment decision making.
Evidencing that trend and according to the Morgan Stanley Institute for Sustainable Investing, 76% of female investors were found to believe that environmental or social factors are important considerations when making their investment decisions.
BSF’s Impact World Equity Fund’s standard retail ‘A’ share class has a minimum investment of US$5,000 (c.£3,243/€4,370), an initial charge of 5% and a management fee of 0.8%.
For more information on BlackRock Impact click here.
