Impact investing - A sustainable strategy for hedge funds

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Impact investing - A sustainable strategy for hedge funds

Executive Summary

Nearly a decade after its arrival on the social finance scene, impact investing is still growing in popularity.
Hedge fund managers have been slow to adopt the strategy, although other types of investment managers are already
gathering assets in this space. Yet as the hedge fund industry continues to face performance headwinds, it may be time to
take a closer look at how this type of sustainable investing may support alpha generation.

Defined as ”the intentional allocation of capital to generate a positive social or environmental impact that can be—and is—measured,”¹ impact investing blends the earlier concepts of investment screens and social selection criteria with the newer enhancements of intentionality and impact metrics.

Two developments have supported the growth of social finance. These include the business megatrend toward sustainability² and the emergence of social metric reporting. These developments indicate that the times appear to be
changing, putting financial companies and investors right in the middle of the social evolution. And, they are responding positively to the idea.

1 Monitor Deloitte, www.deloitte.com/us/en/pages/operations/solutions/about-social-impact-consulting-services July 2016
2 David A. Lubin and Daniel C. Esty, “The Sustainability Imperative,” Harvard Business Review, May 2010

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Performance magazine issue 22, January 2017

Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients.

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