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Bailey McCann, Opalesque New York:

A new report out from Deloitte's Center for Financial Services argues that now is the time for hedge funds to consider impact investing. Report authors suggest that impact investments can provide a new source of alpha in an otherwise challenging market for hedge funds.

The report, which relies largely on data from Preqin, shows that institutional investors are getting more and more interested in making allocations to investments with some sort of positive social benefit. Currently, there are approximately $77.4 billion in assets allocated to investments that could be classified as impact investments. Together, private equity and debt strategies comprise 52 percent of the assets identified as impact investments, while only 9 percent or $7 billion, are allocated to public equities based impact investments. But, the report suggests there are a growing number of impact investing options available to holders of public equities - creating a new opportunity set for hedge funds.

The authors note that there are no "impact hedge funds" in the sense that impact investing is at the core of a fund's strategy, but several managers that use overlays have started to use an impact screen. According to the report, the lack of clear standards and metrics for classifying impact investments makes it difficult to create an impact-first strategy, but researchers also point out that there is a significant market opportunity for a manager that......................

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