6 impact investing firms and funds that are top picks from U.S. News
Pushback against environment, social and governance screening has been building in the investment community. But while ESG may be losing steam, impact investing appears to be on the rise.
While ESG is more a defensive play in the sense that it is used to sort out investments that have outsized risks from climate change and other factors, impact investing involves a more targeted investment strategy that directs dollars to where they can do the most good.
Against that backdrop, U.S. News and World Report has released its top 3 picks among impact investing firms and top 3 impact funds. Here’s a look at its choices:
Impact investing firms
Eaton Vance Corp. When this investment management firm
EV
bought Calvert Investment Management in 2016, it acquired a company that’s been involved in responsible investing for years. It launched an ESG bond portfolio in 1987 and a non-U.S. ESG portfolio in 1992. In 1995, it debuted Calvert Impact Capital. Now, Calvert Impact offers notes targeting community investment, carbon reduction and a more inclusive banking system. It also offers several small business recovery funds.
Impax Asset Management Group PLC. This is another firm
IPXAF
that grew its impact investing offerings through an acquisition. In 2017, it announced that it would buy Pax World Management. Impax has worked with the World Bank to structure an impact bond to finance 300,000 water purifiers for schools and other institutions in Vietnam. The project aims to improve access to clean water for kids, end the use of wood fires for boiling water and give women more time that would otherwise be spent gathering wood and boiling water to purify it.
Trillium Asset Management. This ESG-focused fund provider offers impact investing strategies targeting sustainable agriculture, low-income housing, job creation and retention, Native American community development, financial services that help people avoid predatory payday lenders, environmental sustainability, development of domestic and international communities and child care. It typically directs investments to nonprofit loan funds or development banks and credit unions targeting historically underserved sections of society.
Impact investing funds
First Trust Nasdaq Clean Edge Green Energy Index Fund. This alternative energy fund
QCLN
tracks an index of securities issued by companies involved in advanced materials, energy intelligence, renewable electricity generation and renewable fuels, and energy storage and conversion. The $702 million fund has an expense ratio of 0.59%, or $59 per year for every $10,000 invested. It also paid a 30-day SEC yield of 1.2% as of the end of May. QCLN is up more than 60% over the past five years, though the last few years have been rough going for the fund.
Invesco Water Resources ETF. This ETF
PHO
tracks an index of companies involved in the conservation and purification of water for homes, businesses and industries. Most of its holdings focused on resource security and basic needs, with a smaller percentage allocated to climate action. The $2.1 billion fund has an expense ratio of 0.6% and is up more than 80% over the past five years. It has a 15-year annualized return of 11.2%. It also pays a small trailing-12-month yield of 0.5%.
YWCA Women’s Empowerment ETF. This fund
WOMN
hits on a theme that is big in the impact investing community: women’s empowerment. WOMN tracks an index of companies that “have strong policies and practices in support of women’s empowerment and gender equality,” the fund’s website says. Impact Shares donates all the net advisory profits from WOMN to the YWCA. The $56 million ETF has an expense ratio of 0.75% and is up more than 74% over the past five years, beating its category average. Its trailing-12-month yield is 0.9%.
Read more: 10 global companies leading their sectors on climate change and carbon transition