Younger investors more likely to back impact investment funds.
Millennials are driving the trend in impact investing, research from Barclays reveals. A survey of 2,000 investors found that almost half of young people are backing impact investment funds, up from 30 per cent in 2015.
Those aged under 40 are more likely than older generations to ensure their money is being used for good when they invest. Just 3 per cent of investors aged over 60 have made an impact investment in their lifetime, Barclays’ analysis reveals, and 9 per cent of those aged 50 to 59.
Impact investment funds are a growing breed. Where ethical funds screen out companies involved in ‘negative’ activities such as tobacco or arms, impact funds find firms actively trying to address challenges such as climate change, ageing populations and chronic diseases through their products and services or business practices.
Funds available to investors include Standard Life Global Equity Impact, which taps into trends such as clean energy, sustainable food and low carbon transport. The fund launched in October 2017 and has returned 1.2 per cent over the past six months.
Meanwhile, the Hermes Impact Opportunities Equity fund launched in December 2017. It looks for companies helping to improve life expectancy and quality and those improving access to quality water supply. The fund has returned 7.7 per cent over the past six months.
Other options for investors are the winners of the Money Observer 2018 Fund Awards’ Ethical and SRI category.
Recent research from sustainable bank Triodos found almost two-thirds of people in the UK would prefer to use their money to support companies having a positive impact on society and the environment.
Barclays says younger investors are likely to allocate greater proportions of their money to such investments, with under-30s allocating three times as much of their portfolio to impact investments as those aged 60 and over.
This could be explained by the fact that younger people are more likely to know what impact investing is. Some 57 per cent of under-30s said they understood the term and 62 per cent of those aged between 30 and 39, compared to just 8 per cent of over-60s.
Damian Payiatakis, head of impact investing at Barclays, adds: ‘Younger generations are more naturally comfortable combining financial and societal ambitions when investing.’
However, he also points out that older investors typically have more wealth so could be allocating more money to this sector, even if it’s a smaller proportion of their assets. He adds: ‘It’s the older generation who have more investible wealth and whose choices help shape the investment market and the world their children and grandchildren live in.’