RBC GAM moves SRI funds to Vision Funds

Canada’s impact investment market is experiencing rapid growth, with assets now surpassing $9 billion, according to a report published on Monday by the Responsible Investment Association (RIA).

Impact investing generally seeks to generate a social return alongside a financial return by devoting capital to ventures that aim to produce social and/or environmental benefits.

According to the 2016 Canadian Impact Investment Trends Report, which surveyed 87 organizations, there were $9.2 billion in assets under management (AUM) in impact investments at the end of 2015. This represents a more than doubling in AUM from 2013, when assets were measured at $4.1 billion.

This growth is being driven by an increase in demand for impact investments from both institutional and high net worth investors, the RIA says, and a rise in impact investment products, among other factors. For example, 18% of AUM is now invested indirectly in the impact space through funds, or other products, up from 6% in 2013, the report says.

Most of the impact investing activity is concentrated in British Columbia, Ontario and Quebec (representing 91% of impact assets), according to the report.

Private debt is the most popular vehicle at 32% of the market, followed by private equity (24%), and public equity (20%, which is up from just 3% in 2013), among other vehicles such as residential mortgages, green buildings and consumer loans.

By sector, housing/real estate, clean technology, and energy, are the most popular targets for impact investing.

The bulk of assets (71%) is invested in mature businesses, the report says, and almost all (96%) of the 65% of investors that target financial returns at, or above, market rate say that their impact investment’s performance has met or exceeded their expectations.

Looking ahead, 62% of survey respondents expect either moderate, or high, levels of further growth over the next two years.

“Contributing to local community development” is cited as the top motivation for impact investing, the report says, followed by “contributing to sustainable development, financial opportunity, and stable long-term returns.”

The primary obstacles to increased impact investing, include risk concerns, performance worries, and a shortage of viable products/ investment vehicles, the report adds.

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