"If you're unwilling to talk to a client, it's highly likely someone else will," Pomares says.
As his longtime client, the KL Felicitas Foundation, explains on its Web site, "We started to articulate what we were passionate about and if our advisors could not deliver, we moved on." The 12-year-old family foundation plans to have more than 90% of its assets in impact investments by 2013.
Sonen, which opened its doors last September and has $125 million under management, has been busy developing investment solutions aimed at making the highly-fragmented impact investing market more accessible to investors through their intermediaries including independent advisors, smaller trust companies and regional banks.
"We were once those people," says Pomares, who integrated impact investing into portfolios when he worked at Springcreek Advisors and Guggenheim Investment Advisors.
Julia Sze, a managing director at Sonen, put impact investing into practice at Wells Fargo's Family Wealth Group where she managed large client portfolios. Pomares, Sze and the rest of the Sonen team sport a combined 100-plus years of investment management experience and more than 50 years of impact industry leadership.
Sonen provides a global investment solution for impact investors in high-growth frontier markets. This strategy focuses on investments in such areas as financial services, health care, sustainable agriculture and community clean energy.
Unlike with grants and philanthropy, capital helps provide true sustainable economic development for people living in poverty at the bottom of the pyramid, Pomares says. Sonen's multi-manager, multi-themed, multi-asset class emphasis seeks to minimize risk and maximize financial returns with measureable impact.
Customized Managed Account Platform
What kind of returns can impact investments potentially generate? For its part, Sonen won't discuss performance figures and targets. But to paint some kind of picture, JP Morgan's December 2011 Insight into the Impact Investment Market report stated the average baseline expected return is 18% in emerging market equity and 9% in emerging market corporate debt.
Sonen is biased towards investments where the managers have in-country representation. Members of its team have visited many of these enterprises including farms in South Africa, microfinance operations in Peru, and telecom, financial services and clean energy projects in Botswana.
Sonen integrates Impact Reporting and Investment Standards (IRIS) into its assessments. It enlists a third-party firm to evaluate the accounting, custody, legal and governance practices of its underlying investments.
Sonen also plans to introduce a customized managed account platform later this year that will enable financial advisors and other intermediaries to offer more liquid impact investments to their clients. They'll be able to choose from a variety of asset class offerings including cash-management options; fixed income instruments targeting low income areas or themes such as energy efficiency, water and sanitation; and global and U.S. public equities.