The advent of introducing financial services industry to impact investing has had its share of pros and cons. Impact investing has several environmental and social benefits along with increasing financial gains.
However it has also had an adverse effect on impact-fund managers, who cannot find companies which are ready to invest in large amounts of capitals. In addition, evaluation of such companies is also a major challenge. Experts believe these companies are especially diverse, and stretch across several sectors and also involve lot of risks. Moreover, it is difficult to measure the social and environmental impact of these for the industry specialists.
According to experts, fund managers can market various products as impact investments, whereas for investors this option can prove to be confusing. While some products can aim for below-market risk-adjusted returns, for some impact funds can help in gaining market-rate returns.
Moreover, as quoted by investors, some of the new entrants of impact-fund managers may not have the investment skills and experience which is necessary to achieve appropriate returns.
Sources suggest, impact investing shouldn’t be a priority meant only for fund managers. In addition, an expansion of the industry could help in generating money and also improve human welfare worldwide.