Impact investments in real assets can deliver market-rate returns. Most don’t.



The big takeaway from new benchmarks for impact investments in timber, real estate and infrastructure: find the best fund managers.

Cambridge Associates and the Global Impact Investment Network analyzed the performance of 55 real assets funds that met basic criteria for “impact.” As with conventional funds, returns varied widely.

Impact-oriented timber funds performed best, producing an internal rate of return of 5.9 percent, versus 3.3 percent for conventional timber funds.

Real estate funds as a whole underperformed (0.8 percent vs. 4.9 percent), but newer, smaller funds outperformed.

Infrastructure investments, in renewable energy, climate change and water management, were all over the map.

The best-performing fund produced an IRR of 29 percent and nearly one in four generated IRR of greater than 10 percent. But three funds lost at least 15 percent, bringing the overall pooled-net IRR to near zero.

“Picking the right manager is critical to securing the financial returns you seek,” the GIIN’s Amit Bouri told ImpactAlpha.

The real assets benchmarks from Cambridge and the GIIN follow their report on private-equity and venture-capital impact funds (see,”New Impact Benchmark from Cambridge Associates: Market-Rate Returns (Almost)’).

Next up, says Bouri: private debt.

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