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Healthcare remains top of the impact investing list, new study reveals

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Against the backdrop of a pandemic, healthcare continues to be front and centre as the cause that aligns most with personal values or priorities when making an impact investment, according to a new survey by global asset manager American Century Investments. Study results showcasing responses from the United States, United Kingdom and Germany, examined generational and gender-based attitudes toward impact investing and/or environmental, social and governance (ESG) investing.

“For those considering impact investing, healthcare is a top priority for investors in the US and the UK,” says Guillaume Mascotto, vice president, head of ESG and investment stewardship at American Century. “While healthcare ranked lower for respondents in Germ: any, the threat of Covid-19 has put a global spotlight on health and wellness. In any case, our ESG team interpreted the results as an elevation of the social (S pillar) within the ESG trilogy.

“The Covid-19 pandemic and its human, economic and financial costs is already prompting a growing number of people to re-evaluate their attitude to investing and approach toward the impact of their capital. Therefore, we believe that investors, particularly the younger generation, are more likely to scrutinise companies’ social performance  and seek to find access to investments that generate positive outcomes for people and the planet without sacrificing returns. For example, our study shows that UK millennials are more inclined to choose racial equality and social justice, improved education, and gender equality as their cause of choice compared to other generations.”

For the fourth time, American Century surveyed adults (18 years or older) to better understand attitudes toward impact investing, financial investments designed to have a positive impact on society, while providing potential long-term returns. The initial survey in 2016 included only US investors, but in recent years, the survey included respondents from the UK and Germany. Study results showed similarities and differences between the three countries.

While interest in impact investing remains compelling, it did dip slightly in this year’s study from last year. In the US, the appeal decreased slightly to 51 per cent in 2020 compared to 56 per cent in 2019, which was up significantly from 32 per cent in 2016. Almost half (48 per cent) of the respondents in the UK found the concept of impact investing appealing in 2020 compared to 59 per cent in 2019. New to the study this year, 25 per cent of survey respondents in Germany found it appealing.

The interest was highest among millennials (ages 21 to 38). In the US, 60 per cent of millennials found impact investing appealing compared to the UK at 64 per cent. By comparison, 45 per cent of millennials in Germany found the concept of impact investing important. Appeal among Gen X (ages 39 to 54) was 64 per cent in the US, 50 per cent in the UK and 36 per cent in Germany. The appeal for baby boomers (ages 55 to 73), however, was lower, with 46 per cent in the US, 34 per cent in the UK and 26 per cent in Germany. In all three countries, when asked about the term “impact investing,” the majority of respondents were “not at all familiar” with the concept. Germany had the lowest familiarity at 70 per cent. 

The global study also asked survey respondents how they felt about doing business with companies that align with their values. The results were down this year compared to 2019 in the US and the UK. In the US, 29 per cent of respondents answered, “Yes, it matters to me,” compared to 32 per cent in 2019. And in the UK, 20 per cent felt it “matters” compared to 24 percent in 2019. In Germany, 41 per cent responded, “No, it does not matter to me.”

On the investment side of the survey, respondents were asked about considerations when making investments. “Return on investment,” “risks,” “fees,” and “length of time the money will be invested” continued to be the most important factors when making investments in all three countries. Respondents were given several factors to consider when making an investment; “impact on society” was at the bottom of the list in the US, UK and Germany.

“Our late founder James Stowers, Jr and his wife, Virginia, transferred their equity ownership stake in American Century to the endowment supporting the Stowers Institute, which has resulted in more than 40 per cent of our firm’s annual dividends being directed toward medical research,” says Mascotto. “From an investment standpoint, our focus on healthcare impact targets companies involved in new or innovative treatments for diseases including cancer; access to medicines and health care services in both developed and emerging markets; new solutions that lead to lowering the cost of health care; and more productive and efficient equipment, services and software used for research, diagnostic tests and therapies.”
 

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