Swiss financial services firm UBS has grown its first impact fund to US$325 million from wealthy clients seeking to produce positive social and economic change while making a return on investment.
The Rise Fund was founded to mobilise private wealth for development by several high-profile individuals, among which are Bill McGlashan, Richard Branson and Irish rock star Bono. The fund focuses on seven sectors: agriculture, education, finance, energy, technology, infrastructure and healthcare.
Simon Smiles, UBS Wealth Management’s chief investment officer for its ultra high net-worth clients, told Development Finance that more investors are seeing value in the fund’s ability to take proven investor success across different sectors and geographies and combine this with clear impact goals set by fund managers.
Commenting on how stakeholders currently manage the return-to-impact ratio of their investments, Smiles said: “Over time, investors are increasingly likely to spread their risk and diversify their impact portfolios across asset classes, geographies, sectors, and vintages, or the years in which they start putting capital to work. Impact investments that are diversified by sector and geography help them fulfil that goal.”
The fund’s growth has also brought into focus an increasing number of young wealthy individuals whose choices reflect the impact-led approach to investment.
According to Smiles: “Millennials are particularly attracted to impact investing, but interest is also growing strongly across our entire client base, particularly in Asia.”
The Rise Fund presents a unique opportunity to investors by allowing the creation of new markets that are aligned with the United Nations’ Sustainable Development Goals. The 17 goals in total include the elimination of extreme hunger, improving healthcare, nutrition and education in the poorest countries, as well as developing clean energy industries and achieving gender equality in societies and economic systems.
UBS has committed to work with its private clients to deploy US$5 billion into impact investments over five years up to 2021, all of which are related to the fulfilment of the SDGs.