Morningstar Advisor - April/May 2011 - (Page 62)

Gray Matters Investors Lend a Hand By Karin Anderson and Alison Finn Impact investing aims to make a difference and, sometimes, a profit. In the wake of recent natural disasters around the globe, investing with a social or environmental objective, in addition to a financial one, has been gaining traction as investors search for ways to apply market solutions to local problems around the globe. Often called “impact investing,” this strategy has the potential in the next five to 10 years to grow into a market of approximately $500 billion, or about 1% of total managed assets, according to a 2009 report by the Monitor Institute, a consulting firm. Microfinance, which involves making small loans to entrepreneurs in developing markets, is the most mature of the impact-investment options, in part because of the proliferation of microfinance institutions. But the overall impact market—which includes investment options built around improving the environment, health, education, and community development—is still in its early stages. “Impact investing is similar to the early hedge fund days when there were no rankings or comparisons of the offerings. That context doesn’t exist yet,” says Ron Cordes, co- chairman of Genworth Financial Management and a Calvert Foundation board member. Simply finding the appropriate impact investment is a time-consuming task. At last count, nearly 1,900 microfinance institutions had reported data to the Microfinance Information Exchange, which provides information and analysis on microfinance providers. Plus, there is no centralized place to compare ROI and social impact across similar investment types. Despite these barriers, impact investing has appeal. Investors can feel 62 Morningstar Advisor April/May 2011

Table of Contents for the Digital Edition of Morningstar Advisor - April/May 2011

Morningstar Advisor - April/May 2011
Letter From the Editor
The Debate That Matters Most
What Can the Mutual Fund Industry Do Better?
Cool Logic, Warm Intent
How to Start a Mutual Fund
Owner and Operator
Middle East Revolts Roil Oil Markets
Four Picks for the Present
Investment Briefs
How We Improve Our Odds of Picking Outperformers
Health Care Survived 2010, but Investors Want Proof
The Global Fund-Leadership Playoffs: Europe vs. the United States
U.S. Fund Investors Have It Good
U.S. Fund Firms Learn to Speak UCITS
Balancing Act
The Tamer Ride
Investors Lend a Hand
Healthy, Wealthy, and Wide
Foreign Funds That Win at Concentration
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
VAs Finish 2010 With a Solid Gain
Buying Good Funds, Poorly

Morningstar Advisor - April/May 2011