One of the best ways to succeed in the market is to adapt your investing strategy to what’s going on in the world…
Take the COVID-19 pandemic, for example.
If you’re a regular reader, you know Daily editor Teeka Tiwari has been pounding the table on the surge we’re seeing in biotech companies. The pandemic is accelerating demand for the innovations these companies are producing in science and medicine.
Investors who hopped onto this trend early are already seeing profits. Since the outbreak, top biotech companies like Moderna and Seres Therapeutics are up 151% and 651%.
But this strategy isn’t isolated to just the pandemic. In fact, other issues – like racial injustice and climate change – have spurred a different style of investing.
And those taking advantage are already proving it’s paying off.
I’ll explain below exactly what it is… and how it can help you beat the market…
Introducing “Impact Investing”
Most investors focus on two factors: risk and return. But more people are becoming interested in a third factor: environmental and social issues.
It’s called “impact investing.”
And it involves investing in companies that benefit society. For example, companies that focus on green energy… or businesses that build affordable housing.
And impact investing can perform as well as – or even better than – the market.
Take the MSCI All Country World Index (ACWI) and MSCI ACWI ESG Universal Index (ESG = Environmental, Social, and Corporate Governance) as an example.
ACWI covers 3,000-plus stocks in 49 countries. So it’s a good proxy for the world’s investable universe. And as its name implies, ESG focuses on impact investing.
The ESG version of the index has beaten the vanilla one in seven out of the past 10 years. And ESG-focused exchange-traded funds (ETFs) have seen record asset flows during the pandemic. They recently hit an all-time high of over $100 billion in assets.
This investing class is getting more popular. And there’s a unique way to get involved…
A Win-Win Scenario
Calvert Impact Capital’s Community Investment Note is one simple way to make an impact with an investment.
I recently spoke to Justin Conway, Calvert’s vice president of investment partnerships.
He says the note (a fixed-income security) is a convenient way for people to invest in the real needs of communities around the world:
Impact investing is a great complement to one’s philanthropy. You can earn returns while advancing the causes important to you.
Many investors choose short terms to start. But after they see the positive impact their investment is having in communities, about 90% of them reinvest at maturity.
The note supports nine atypical sectors. For example, Calvert and its partners have helped:
Create or preserve 61,076 homes
Finance 3,512 schools and educational institutions
Serve 2,891,616 healthcare patients
Create or retain 519,721 small business jobs
Reduce 93,925 tons of waste
Support 619,836 smallholder farmers
More than 18,000 investors have invested over $2 billion in the program since 1995. And since then, Calvert’s has a record of 100% repayment of principal and interest.
But this is not a donation. Beyond a social return, the Community Investment Note offers an attractive financial return.
Here are the rates and terms as of September:
You might think these returns look low. But all five options have much higher rates – anywhere from 3x to 10x – than traditional income-producing assets like certificates of deposit (CDs) and Treasurys.
So, if you want to get into impact investing, consider the Community Investment Note.
Not only does your money go to a good cause… you also earn a higher interest rate than with traditional options. And at the end of the term, you get your money back. Best of all, you can start with as little as $20.
If you want more information about the Calvert Impact Capital’s Community Investment Note, visit the company’s website here. As always, do your homework before making any investment.
It feels good to help someone else in need. But if you can also make money while doing so… it’s a win-win scenario.
Analyst, Palm Beach Daily
P.S. Let us know if you plan to take part in this “impact investment.” And tell us if you’d like to hear about other opportunities in this space by emailing us here.