Retail Investors: Rising Interest and Opportunity in Impact Investing

As we start off the New Year, TriLinc Global will be discussing notable trends from 2015 that we see as relevant to the development and growth of the impact investing sector in 2016 and beyond. This is the second post in a four-part series.


As TriLinc looks toward 2016, it is clear that the evolving regulatory landscape is creating a more enabling environment for a myriad of investors to align their capital with their values in pursuit of economic, environmental and social goals.

This environment has facilitated the expansion of impact products available in the market – from social impact bonds, to mutual funds and exchange-traded funds – and has transcended traditional product offerings to more closely meet investors’ specific ESG and impact interests. Until recently, however, few products were specially tailored to retail investors, compared to institutional and high net worth investors. With the arrival of retail, market-rate impact products in the past few years, retail investors at last are receiving due recognition as essential participants in the impact investment space.

Recent studies validate the retail channel’s importance to the sector. A report by the Global Impact Investing Network (GIIN) dated April 2015, “ImpactBase Snapshot: An Analysis of 300+ Impact Investing Funds,” found that 17 percent of market-rate impact funds targeted retail investors. Given the relative size of the retail investing market – roughly 91 million investors according to BNY Mellon – the retail channel represents a significant market opportunity for the impact investing community.

Financial advisors are in agreement. A recent survey by SRI examining financial professionals’ views on impact investing found that over half of surveyed financial advisors either currently offer, or have offered, SRI and/or ESG investment strategies to their retail clients. Perhaps even more revealing is that 73 percent said impact investing would become a “somewhat bigger” or “much bigger” part of their practice over the next five years.

This is in large part because retail investors are driving the demand for impact and ESG products across their portfolio allocations. A study conducted by Morgan Stanley showed that 71 percent of individual investors are interested in sustainable investing.  According to SRI, 58 percent of advisors claimed the foremost reason they offered impact investing to their clients was in response to demand. Millennials, women, and college-educated investors were among the top three investor profiles requesting impact strategies from their advisors, followed by high net worth individuals, baby boomers and senior investors.

With demand for impact investing in the retail space being driven from the bottom up, the development of tailored impact product offerings for retail investors will continue to be of vital importance. As retail investors continue to increase their knowledge and appetite for impact, and gain access to more market-based investment options, they will exponentially increase the flow of capital dedicated to solving challenges facing our society.

– This post is the second in the four-part series, “Impact Investing: What’s to Come in 2016,” written by Melissa Tickle, TriLinc Global Impact & ESG Analyst.