Abby Schultz

The latest update of a guide on private-market investing to improve society and the environment shows the sector is as strong as ever, even if it isn't the focus these days.

The IA 50 is a free, searchable database of vetted global impact managers derived from qualitative and quantitative analysis by ImpactAssets, a $3 billion nonprofit impact-investing firm.

In its 14th year, the IA 50 -- released on Tuesday -- saw a 250% boost in applications since 2020, and a 35% increase in total assets under management to nearly $131 billion in private-equity, private-debt, and venture-capital strategies.

"The scale, growth and credibility of this year's IA 50 managers demonstrate that impact investing is not only thriving, it is becoming an undeniable force in the market," said Margret Trilli, ImpactAssets CEO and CIO.

The core list includes 50 private managers with track records of at least three years, nearly half of which have assets of $1 billion or more. These larger managers include Switzerland-based Blue Earth Capital, New York-based ReThink Capital Partners, and New Orleans-based Enhanced Capital, although big-dollar funds that are part of conventional asset managers such as KKR's global impact fund or Bain Capital's Double Impact, aren't included.

The database also includes 65 emerging managers -- generally smaller, newer enterprises -- and 50 emeritus managers that have been on the list for at least five years. Nine of those managers, including Calvert Impact Capital and LeapFrog Investments, have been on the list every year.

Across the full list of 165 firms, half focus on social themes such as financial inclusion and community development, and 33% focus on investments tackling climate change. The remaining funds focused on place-based impact or diversified themes.

The IA 50 isn't a ranking of the best funds, but a representation of the market for the "impact curious," and for investors who want to do their own research, according to Jed Emerson, who chairs the IA 50 review committee. More than 45,000 users have tapped the list in each of the last two years, ImpactAssets said.

That means, impact investors aren't necessarily the target audience. "You still see many mainstream investment managers who do not identify as social or environmental or impact managers use social and environmental and impact analysis because they simply view it as one more level of data, one more lens to be able to understand risk and return frameworks," Emerson told Barron's.

"If you're a long-term asset owner and you're not thinking about either the risk of climate crisis or the opportunity to invest in climate tech as part of your diversified strategy, you're not really managing your investment framework effectively," he said.

Impact managers are aware of President Donald Trump's disdain for investments that focus on social and environmental themes, but as one manager told Emerson, "We never invested on the basis of public policy -- we've invested on the basis of practical entrepreneurial opportunity and vision."

These are also investments in private firms that aren't subject to the same pressures as listed companies and may benefit as a wider array of investors gain access to private equity and private debt.

Among all IA 50 firms, 74% seek returns at or above market rate. Those that don't are providing catalytic capital to fledgling businesses.

"There's still a need for early stage, high-risk capital that's going into places where traditional market rate investors are not going," Emerson said. "We're talking about a capital continuum from philanthropic to near-market to market-rate capital, and across that continuum, there are literally hundreds of fund managers now around the world."

Write to Abby Schultz at abby.schultz@barrons.com

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March 11, 2025 06:30 ET (10:30 GMT)

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