Impact investment thesis, strategy and portfolio management

Introduction

The section on the purpose of impact addressed the importance of impact investing and the range of opportunities available to impact investment. This section gets more granular, looking at how to build an investment thesis and how then to develop strategies to implement that thesis. It then moves on to look at some of the criteria and indicators that might be built into that thesis in order to test the strategy and how to build and manage impact portfolios.

How to use these resources

As well as drawing on the knowledge contained in the section on purpose, this section also relies on concepts covered in the section on impact measurement, management and reporting, such as theories of change. If you have not already done so, it would be helpful to read the content in those sections first.

Resources in this module

Development and interpretation of impact thesis
Impact investing goals
Impact criteria, indicators and data
Investment decision-making processes based on impact analysis

Glossary of terms

We have put together a glossary of terms for impact investing

Visit our glossary

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Development and interpretation of impact thesis

There are no Advanced resources for this topic

Impact investing goals

Impact Investing Handbook (Chapter 3, pp 57-85)

Rockefeller Philanthropy Advisors

Reading time: 40 minutes

The report encourages separating the ‘why’ from your investment and impact goals and explains in detail how to develop a theory of change, the underlying components involved and their limits. It discusses aligning Impact Intention and Impact Measurement and Management and the support available to investees, investors and intermediaries. The report also highlights the difference between setting impact themes (i.e. climate change) versus lenses (i.e. investing with a gender lens).

What the reviewer found helpful:
“The chapter ends with a practitioner exercise and example which is a great way of putting the reading into practice”

Eilidh Anderson

Advanced

Impact criteria, indicators and data

There are no Advanced resources for this topic

Investment decision-making processes based on impact analysis

Risk, return and Impact:Understanding diversification and performance within an impact investing portfolio

Impact Assets

Reading time: 25 minutes

This paper considers the concepts of risk, return and impact within the context of impact investing, and presents a range of key considerations for investors when constructing an impact portfolio. The paper also explores the concept of the “New Efficient Frontier” – a three-dimensional framework within which to assess the performance of impact investments. Some deeply entrenched biases are addressed, and useful background is provided about both impact investing and about traditional risk and return management.

What the reviewer found helpful:
“An accessible yet insightful paper that looks at the traditional concepts
of risk and return through the lens of impact investing.”

Yinni Hu

Advanced