Truestone Investment Management has taken a fund of funds’ approach with its IM Truestone global impact fund because diversity is important in the higher-risk areas in which it invests.
It is managing the new qualified investor scheme as a broad-based global social impact fund. It will invest only in opportunities that have a positive impact on poor communities or benefit the environment. Areas in which it invests through other funds, such as Oeics, closed-ended funds and private equity limited partnerships, include renewable energy, sustainable forestry, microfinance, agriculture and social housing.
The firm says sustainable and responsible investment funds avoid sectors seen as harmful to society and the environment. They also try to bring about improvements through engagement but Truestone says social impact goes further than this. For example, microfinance involves lending small amounts of money to people who are building businesses in poor communities who have no access to banks. This qualifies as a social impact investment because these people employ other people as their businesses grow, which helps the economic development of poor regions.
The Truestone fund will initially comprise 20 funds and more will be added as the portfolio grows. But funds will not be added just because they invest in companies and projects that help society. Truestone will monitor investments to ensure they are delivering in terms of social impact but will also focus on attractive returns for investors.
Truestone head of employee benefits John Deacon says: “One of the areas it is close to is philanthropy but it is not about philanthropy, it is about sustainable investment. In philanthropy there will often be charitable donations that invest in setting up projects but the need is for sustainable investment and this is key to what we are doing.
“We are diversifying not only across sectors but across managers. There are opportunities in emerging and frontier markets and things such as social housing in the UK.”