Concerns about health care and climate change are driving an increase in impact investing, according to a recent study by American Century Investments, a global asset manager based in Kansas City.
The highest percentage of United States respondents, 30%, said healthcare and disease prevention and cures mattered the most to them for impact investing. The environment and sustainability came in a close second. Other topics of concern were education, mitigating poverty, gender equality and aligning investments with religious principles. In the United Kingdom, 35% said health care was the top concern.
American Century Investments polled 1,003 people in the United States and 1,004 in the United Kingdom to find out how much impact investing is growing and what issues are important to investors. This is the first time the United Kingdom was included in the yearly Impact Investing survey.
Concerns about health care fall into line with the mission of American Century Investments. The controlling owner of American Century is the nonprofit Stowers Institute for Medical Research, a medical research facility in Kansas City that draws scientists from around the globe to do research on cancer and other degenerative diseases.
Healthcare and climate change go hand in hand because the environment has a direct impact on people’s health, said Guillaume Mascotto, vice president, head of ESG and investment stewardship at American Century Investments. Both are drivers behind the dramatic increase in interest in investments that take into consideration environmental, social and governance issues and social responsibility issues, he added.
Fifty-six percent of U.S. participants and 59% of those in the U.K. said impact investing is either "somewhat" or "very appealing." For U.S. respondents, this is up from 49% in 2018 and 38% in 2016.
More millennials (age 21 to 38) in the United States (65%) said impacting investing is important than other generations. Fifty-five percent of Gen Xers (age 39 to 54) said impact investing is appealing and 49% of baby boomers (age 55 to 73) agreed.
"The findings of our study reaffirm that interest in impact investing continues to be on an upward trajectory across all age groups, but most importantly, it is encouraging to see that millennials are in the driver's seat for impact investing,” Mascotto said. Nearly 40% of millennials in the U.S. plan to use impact investing within the next five years, compared to about 33% in the U.K.
"These trends are a significant signal to asset management firms that they will need to enhance their investment standards in an industry that will soon have to meet the expectations of more socially and environmentally responsible millennials," Mascotto explained. "As this generation increasingly demonstrates a desire to align their positive intentions to address pressing issues with their investment choices, it is crucial that we understand their values and preferences so that we can properly assess both opportunities and risks."
On the cautionary side, investors said the return on investment, potential risks, fees and length of time required to receive a return on the investment are the top considerations when using impact investments.