INVESTING/PORTFOLIO STRATEGIES

NEPC: Foundations, endowments expect impact investments to equal or outperform market

The majority of foundations and endowments that currently use impact investing expect these allocations to equal or outperform the overall market, an NEPC survey said.

While only 28% of foundations and endowments surveyed currently have impact exposure in their portfolios, 86% of that group expects impact strategies to either match or outperform the broader market, according to the results of an NEPC poll.

In a sign that impact investing has become mainstream, more than half of respondents — 52% —have already moved forward with impact investing or plan to consider it.

The majority — 94% — of those who have implemented impact investing cite alignment with mission and/or values as a primary driver in their decision. This is likely why 50% implement impact investing on a portfolio-wide basis, not as a small allocation within the overall portfolio, the survey said.

For the respondents who don’t currently have impact exposure, 35% plan to review this in the future and 50% cited the need for greater education of how impact investing works.

For those not using an impact strategy, 50% say they’re looking for more evidence of tangible results, and 28% are awaiting broader acceptance of impact investing or more mission-aligned investment options.

The NEPC poll has run since the third quarter of 2013, asking both tracking and topical questions and this latest quarter witnessed two record results. According to the latest survey, 82% of respondents say a slowdown in global growth is the biggest threat to near-term portfolio performance, the highest since NEPC has conducted the quarterly survey. Plus, 60% of respondents say the global economy is stagnant and in the same place as last year, another record.

NEPC surveyed 61 foundations and endowments in mid-April.