A wide spectrum
As with most fields, the choice of manager depends on the circumstances and on the specific purpose and requirements of the portfolio.
Elroy Dimson, chairman of the Centre for Endowment Asset Management at Cambridge Judge Business School, would argue that once you are divested, you have no influence over a company whatsoever.
Impact investing sits very close to philanthropy on the ESG spectrum, where performance expectation is likely to be secondary to the primary goal of positive change. Here there tends to be direct involvement with target companies at a strategic level and is a clear need for specialist focus.
But for most investors impact will be separate from the core investment portfolio, and here the need is for selection and stewardship across a much larger universe of investable companies. This is where screening and weighting are key, and where traditional manager skills are the order of the day.
Investors need their managers to be specialised and focused not in belief sets, but in the management of robust, data-backed processes, and in the execution of client preferences in an unbiased and unemotional way.
Mark Northway is an investment manager at Sparrows Capital
