The report analyses the portfolios of 76 Toniic 100% Impact Network members representing US$2.8 billion of capital committed to impact investments. This is almost twice the size of the assets studied in the first T100 Impact Portfolio Series report in 2016. The portfolios range in size from less than US$2 million to more than US$500 million in assets.

The report reveals that impact investors are:

• Going farther faster
• Meeting their financial goals while deepening impact performance
• Benefiting from a maturing impact marketplace that is enabling depth, diversification, and measurement

A maturing impact marketplace is enabling impact portfolios to target more thematic impact products across most asset classes, however, finding impactful public equities, hedge fund and cash-equivalent options remains a challenge.

Respondents do not believe they need to sacrifice financial performance to achieve impact. They tune their financial and impact return expectations to their goals and constraints. While 73% target commercial returns at the portfolio level, 85% make sub-commercial investments within their portfolios to achieve deeper impact. In addition, most respondents believe impact investments yield the same or higher returns compared to traditional investments.

Most respondents affirm that a spectrum of capital and financial returns is needed to solve the most pressing social issues. As such, 82% coordinate their philanthropy and impact investment strategies, seeing this as an opportunity to support innovative solutions to big challenges. Furthermore, many consciously choose a broader range of return expectations for some investments that they believe have the potential for high impact.

Impact measurement remains a work in progress with the collection of quality data being the main challenge. The United Nations (UN) Sustainable Development Goals (SDGs) have been adopted by some as a tool for analysing impact. This makes it possible to define, benchmark, and compare impact goals.

The lack of compelling quantitative and qualitative data, case studies, and stories illustrating the viability of impact investment is one of the primary reasons investors stay on the sidelines. In addition, financial intermediaries do not see a business case for the development of impact investing products and services.

By publishing this research, Toniic seeks to:

• Inspire and enable others to explore and accelerate their transition to impact investing
• Demonstrate that there is a significant and growing market for impact generating investment products and services
• Empower the research community to begin exploring systemic issues related to impact investments

1. There is growing sentiment that impact investing is a part of a more holistic endeavour: personal transformation and growth as realised through the intentional alignment of all of ones personal and financial resources.
2. For all respondents, the desire to make a positive contribution goes well beyond their portfolios. While seemingly obvious, these motivations are foundational to why respondents are willing to question the status quo, move from non-impact to impact, and, despite the challenges, evolve and deepen their practice.
3. Members continue to successfully move their assets into investments delivering impact and financial performance aligned with their expectations. They also identify opportunities that allow them to link their assets, skills, and networks to have impact beyond their portfolios.
4. Hedge funds are typically underweight in an impact portfolio (relative to non-impact portfolios) primarily as a result of there being fewer available impact strategies. In addition, many impact investors believe that taking short positions is not consistent with the mission of creating positive social and environmental impact with their investments. On the other hand, real assets and private equity are relative overweight when compared to non-impact portfolios.
5. Impact investors tend to predominantly invest locally (“investor home bias”), because major regional differences often exist that demand not only local expertise, but often also physical presence on site. Furthermore, some investors invest largely locally to help tackle domestic issues, while others invest where they see the greatest need.
6. Catalytic philanthropy and thematic investing are cited as the two most powerful ways to achieve deep impact. 82% use philanthropy to address issues and opportunities related to impact investing. 72% use philanthropy to support the impact ecosystem. Findings suggest that impact investing is complementary to philanthropy and vice versa.
7. Several respondents use either a self-defined or community-defined “lens” as an overlay to drive their impact strategies and portfolio investment decisions. A lens typically reflects the key target outcome that is important to the investor and consists of criteria and/or principles that can be used as a checklist for due diligence and to set impact and financial goals with the investee.
8. The Toniic SDG Impact Theme Framework maps impact themes commonly invested in by impact investors to the SDGs. The framework also connects the SDGs and impact themes with a pre-selection of impact metrics to facilitate the measurement of social and environmental impacts of investments.
9. The Toniic Directory provides access to an online searchable catalogue of more than 1,700 impact investments across all asset classes sourced from the portfolios of members and other catalytic organisations in the impact ecosystem. The directory is searchable by asset class, impact theme, UN SDG, investment vehicle, impact geography, and more.
10. The Excel-based Toniic Impact Portfolio Tool enables impact investors to document the interrelationships between asset classes and the impact of a portfolio of investments. It allows an investor to classify underlying investments by its intended impact as well as other variables including liquidity, expected returns, geography, management structures, and more. The outputs of the tool are visual representations of the individual portfolios and investment data.