Impact investing is the intentional allocation of capital to investment opportunities that generate measurable positive social or environmental impacts, as well as financial returns. While traditional investment strategies often seek to beat the market, impact investments seek to change the utility of the market and to increase the value of the extra-financial aspects found in a just and sustainable world. Impact investments are intended to yield future returns. This means that impact investing is about a return that is not measured quarterly, but rather over a long time horizon.
Impact investments, particularly in investment-grade fixed income portfolios, do not offer a quick fix to a problem. This approach is defined by investments in projects and organizations that are improving outcomes in education, healthcare, equality, communities and ecosystems. Impact is about investing in positive outcomes for tomorrow’s generations.
Impact Investment Solutions from SNW
SNW delivers high-quality municipal and taxable fixed income management. The team offers four strategies: National Municipal, Municipal/Taxable Blend, Taxable and Credit. Impact overlays are available for each SNW strategy, and include only securities that are highly rated within the team’s proprietary impact methodology.
SNW offers four types of impact overlay: General, Education, Environment and Gender Equity. The General Impact overlay is a broad-spectrum approach to impact investing in which assets are allocated to any available investment opportunity with impact potential. This includes impact opportunities related to the environment, education, housing, healthcare, social improvement, energy efficiency, and infrastructure improvements, among others.
SNW’s approach to impact investing is rooted in a fundamental commitment to understanding both the impact opportunities and limitations inherent in any entity or credit under evaluation. The team has developed a proprietary impact methodology that assigns ESG and impact metrics to each category of issuers. This enables them to evaluate opportunities on a relative basis within each category.
General Impact Overlay Bond Examples
State of Colorado, Building Excellent Schools Today Program (BEST)
The State of Colorado Building Excellent Schools Today (BEST) grant program is operated by the Colorado Department of Education. BEST provides competitive grants to school districts, charter schools, institute charter schools, boards of cooperative educational services, and the Colorado School for the Deaf and the Blind. BEST funds can be used for the construction of new schools as well as general construction and renovation of existing school facilities. Its purpose is to help public schools with a multitude of capital construction needs.
Connecticut Housing Finance Authority
The Connecticut Housing Finance Authority (CHFA) was created as a self-supporting quasi-public housing agency charged with expanding affordable housing opportunities for Connecticut’s low- and moderate-income families and individuals. CHFA’s purpose is to help alleviate the State’s shortage of affordable housing for low- and moderate-income families and individuals and, when appropriate, to promote or maintain the economic development of the State through employer-assisted housing efforts by providing low-interest single family mortgage programs. The CHFA oversees a number of programs that are focused on disadvantaged populations. These programs include programs assisting families with earnings below the area median income.