The Global Impact Investing Network (GIIN) and Cambridge Associates, a global investment firm, have launched the Impact Investing Benchmark, the first comprehensive analysis of the financial performance of market rate private equity and venture capital impact investing funds.
The Benchmark comprises 51 private investment funds pursuing a range of social impact objectives (not including environmental impact objectives), operating across geographies and sectors and launched between 1998 to 2010.
The results demonstrate strong performance of funds in a number of years studied. Combined, Impact investment funds launched between 1998 and 2004 have outperformed funds in a comparative universe of conventional private investment funds. Over the full period analysed, the benchmark has returned 6.9% to investors versus 8.1% for the comparative universe, however much of the performance in more recent years remained unrealised.
Impact investment funds that raised under US$100 million provided a net internal rate of return of 9.5% to investors, outperforming similar-sized funds in the comparative universe (4.5%). Emerging market impact investment funds have returned 9.1% to investors versus 4.8% for developed markets impact investment funds over the full period analysed. Those focused on Africa have performed particularly well, returning 9.7%.
Investing via funds is a common strategy for impact investors of all types and sizes, including foundation, banks, superannuation funds, development finance institutions, insurance companies and family offices.
The report marks the launch of the first ever financial performance benchmark of private impact investing funds, which Cambridge Associates will maintain and update on a quarterly basis.
In Australia, Impact Investing Australia is convening a working group focused on creating a recognised set of financial data on Australian impact investments, which will help to establish performance benchmarks for impact investing.