We invest in education companies like Bridge International Academies, a network of low cost schools in Kenya also funded by the Gates Foundation. We are also an equity investor in Microvest Holdings, an asset management firm investing in underbanked markets via a family of funds.
For public equity and debt we hire managers to advise us on different strategies. U.S. Trust advises us on public debt portfolios managed through Breckinridge Capital Advisors and Community Capital Management. First Affirmative Financial Network advises us on public equity strategies, including separately managed accounts with Everence and Pax World, both of which have outperformed their respective benchmarks since the foundation’s date of investment through November 1, 2016.
Ellis: Stephanie, your website says that all new investments being made by the Cordes Foundation’s endowment are impact focused as well. Where are you finding opportunities?
Cordes: We are global in our approach with investment exposure in over 75 countries.
Ellis: Vanessa, what is driving the expansion of impact investing asset classes and strategies?
Grellet: This year the Nexus Group included ESG strategies in our definition of impact investing. Diversification of risk is an important part of this expansion. People with large portfolios want more choices across asset classes.
Many investors don’t understand that impact investing is not an all or nothing proposition. Advisors can start small for their clients, investing in one impact product. Investors should decide what impact strategies are important to them, then have their advisors research the available products.
As the pace of the millennial wealth transfer increases, advisors must be more innovative and learn about the investment preferences of their clients’ children as well as the generation controlling most of the wealth now. This approach creates more trust and stickier assets. It’s a win- win for investors and their advisors.
Ellis: Are there tools that advisors can use to facilitate this engagement with their clients?
Cordes: I think there’s an education barrier for investors and advisors regarding impact opportunities and how to begin the conversation. I participated in the the Harvard IRI (Institute for Responsible Investing) nextgen program, run in collaboration with the World Economic Forum, which engaged 30 millennial impact investors and included training on how to have a credible conversation with your advisor about aligning your portfolio with your values.
Grellet: Creating a community of like-minded young investors exchanging ideas with members you know have already faced a situation you find yourself in is what we’re trying to build. Nexus members also participate in other investor groups that exchange information.
Resources for their financial advisors include USSIF, The Forum for Sustainable and Impact Investing, which supports its investment industry members through education and advocacy programs. The Global Impact Investing Network (GIIN), SOCAP, Confluence, Big Path Capital and others put on conferences that can help advisors begin the conversation with clients and develop a peer support group.