A Tale Of Two Impacts

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With a title like "A Tale Of Two Impacts", the temptation is high to offer some sort of Dickensian quote to kick this post off... but I'll spare the reader. Instead, I'll start by observing the surreal juxtaposition of an security-and-canapés event hosted by Rockefeller Advisors and the Federal Reserve Bank followed promptly by the impact mosh pit known as SOCAP. With my punk roots (yep, my high school band was named "Gang Green" - an early nod to environmentalism?), one would have thought that the latter would have been the more interesting. Well... one would have been wrong.

Tags:  SOCAP,   Federal Reserve,   Equilibrium Capital,   Dave Chen,  
Category:  Mission Related Investing

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Member Comments: 1 comments

Tim MacDonald         Posted On :  Monday, Oct 15, 2012 (1 year, 26 weeks, 13 hours, 41 minutes)

Two issues need to be addressed: Asset Class and Exit Strategy. Institutional investors have the scale and longevity to invest directly into the real economy, becoming partners in the productive use of productive assets and recovering capital and realizing returns from the real economy, through their agreed split in the cash flows generated in consequence of their investments. Almost any direct investment into the real economy can be structured to deliver both alpha and impact, to achieve both financial and societal objectives. Financial objectives are the same for every institution: principal protection; programmed performance; threshold returns; constancy; transparency; and alignment of interests. How much of this can you actually get from the Securitized Economy? Societal objectives can be custom-crafted to the stewardship sensitivities of the investor(s): climate stability; resource stewardship; social mobility; financial integrity; global community; economic adaptability. All of these are "market externalities" in the price-and-price-alone ecosystems of the Securitized Economy. The investing skills of most institutional investors, however, continue to be dominated by the principles of Asset Allocation according to Modern Portfolio Theory, which only apply to the Securitized Economy. Impact Investing can and should be a catalyst for teaching Institutions the skills they need to see that new value creation in the real economy almost always evolves outside of established asset classes. These, after all, are silos for containing the received wisdom about how the economy used to be architected, back in the past, when those assets were first being classified. Impact Investing can and should also be a catalyst for teaching Institutions that Exit by Sale is not their only, or even their best, option for recovering principal and realizing returns. If they invest in cash flows -- instead of securitized asset prices -- then they can recover pr



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