There continues to be increased demand for impactful investment solutions and an increase in the value of sustainable assets invested globally. We believe that ESG (Environmental, Social and Governance) factors are fundamental to credit analysis, and that impact is a measure of the outcome made possible from each investment. Impact adoption presents the greatest opportunity for the investment community today to strengthen their relationships, improve long term investment performance and increase assets under management. The municipal bond market is the largest community focused impact investing vehicle in the nation.
In Math We Trust
The Annual Survey of the Global Impact Investing Network showed that the size of the global impact investing market doubled in the last year, from $114 billion in assets to $228 billion. In fact, seventy-five percent of investors are interested in ESG products, with women and millennials leading the charge. Here are the key factors for the rise of ESG and impact investing worldwide:
Millennials: 77% of millennials have portfolios that include ESG and/or impact investments in their portfolio.
Women: The growing influence of women as decision makers who are focused on the social and financial outcomes of their investments. Women currently control about $14 trillion in assets. In the coming years that number will increase to a minimum of $22 trillion.
High Net Worth Individuals: 40% of high-net-worth investors surveyed by U.S. Trust either own or invest in companies with strong ESG track records.
Risk Management and Financial Return
In addition to driving world-positive impact, ESG considerations play an important role in managing risk in investment portfolios. Establishing stronger risk metrics by assessing and evaluating issuers on key ESG factors and predictive analytics can help manage volatility and drive alpha. Failure to integrate analysis of ESG factors into the investment decision-making process overlooks potential risks. Underwriting good behaviors is more likely to result in better long term outcomes.
The Original Impact Investment: The Humble Municipal Bond
The municipal bond market is the largest community focused impact investing vehicle in the nation; it funds the critical infrastructure that communities rely on every day — from schools and roads, to parks and water systems. These bonds also fund transformational, next-generation projects like community owned broadband networks that democratize access to information, and solar microgrids so communities can establish energy independence. Municipal bonds can also contribute to a community’s “happiness factor” — the preponderance of recreational space, bicycle lanes and playing fields.
Increasingly, our communities and civic leaders are being asked to do more with less, and they are looking for fresh ideas and new technologies to solve their financing challenges. At the same time, more investors are looking to direct their money to world-positive projects.
Through the use of sophisticated technology, we can wring out the inefficiencies of the long neglected municipal bond market, leaving room to solve some of the nation’s larger infrastructure and social welfare problems. By breaking down layers of complexity and standardizing contracts and structures, the mission of Neighborly Corporation as a whole is to connect communities with the capital they need, when they need it, and at the best price.
About Neighborly Investments: doing well by doing good
Neighborly Investments is a technology-driven investment manager offering optimized financial returns for customized impact portfolios. Using pioneering software to augment deep municipal market expertise, Neighborly Investments efficiently sources, values and analyzes the breadth of the market’s offerings, and executes according to each client’s objectives. In addition to earning competitive returns, each client portfolio tells a unique impact story, reflecting individual goals and passions. Neighborly Investments is an institutional municipal bond manager based in Boston, MA, serving high-net worth investors, registered investment advisors (RIAs) and institutional investors such as community banks and not-for-profit organizations that want to engage impactfully with their local communities.
For complete information regarding Neighborly Investments, you may request a copy of Neighborly Investments’ Form ADV Part 2A.
About Neighborly Securities
Neighborly Securities, Inc. is a registered broker dealer and member of FINRA, SIPC and registered with MSRB. Neighborly Securities is not a registered Municipal Advisor under Regulation MA under Section 15B of the Securities Exchange Act.