- RBC Global Asset Management got $7.5 million from a California-based pension fund in early May to deploy in its flagship impact investing initiative, says the firm.
- RBC GAM says its impact investment project has supported homeownership for low-income residents, while yielding a healthy return on investment for clients.
- The firm says there is rising interest among investors for impact investing.
RBC Global Asset Management says an investment from a California-based pension fund earlier this month will help promote affordable housing, while also showing what its flagship impact investing initiative can accomplish.
“You can make money and do good at the same time,” Ron Homer, chief strategist for U.S. impact investing at RBC GAM, told Karma. “It’s not either-or.”
The Fresno County Employees’ Retirement Association decided to cut an additional check for $7.5 million to RBC GAM’s Access Capital Community Investment Fund, after the firm already invested $45 million of the retirement association’s money into mortgages and affordable housing projects in the Fresno area. The project yielded over 8% net return on investment over nearly a year until Sept. 30, 2019, Homer said.
RBC’s Access Capital Community Investment strategy launched in 1998 primarily to help financial institutions comply with the Community Reinvestment Act, which directed banks to extend credit to borrowers, especially in moderate- to lower-income brackets. Since then, the program has evolved to include over 200 institutional investors and diverse clients, such as public pension plans, wealthy individuals and foundations that want to invest in their local communities.
The Fresno Retirement Association picked where they wanted to spend their capital and RBC designed the program, including how to deploy the money and targets for returns. The pension fund’s money has purchased federally backed loans from originators such as the California Housing Finance Agency. RBC’s program provides capital to support homeownership and affordable housing, especially for low-income Fresno residents.
Homer has a very clear definition for his portfolio, adding that impact investing is different from ESG. “Investors that look at environmental, social and governance factors take them into account both positively and negatively on the investment,” he says. “On impact investment, we define it as we are looking to make a specific financial return with a specific social investment.”
RBC GAM currently manages about $1.3 billion in the impact investing space in the U.S.
The COVID-19 pandemic makes community investment even more relevant for clients, says Homer.
The firm says that interest in the impact investing space is growing. Its most recent responsible investing survey, shows prospective clients’ interest in deploying capital to the space rising by nine percentage points in the next five years.
Photo by Darren Eagles/Getty Images for RBC