Impact investing, which aims to generate positive social and environmental impact alongside financial returns, has seen significant growth in recent years. Major financial institutions like Vanguard are now offering more impact investing products to tap into rising demand. In 2023, we expect the impact investing market to continue expanding rapidly.
Growing interest in values-aligned investing
Impact investing is part of the broader trend towards values-aligned investing. Surveys indicate that a majority of investors now factor social or environmental impacts into their decisions. This is especially true for younger investors who want their investments to reflect their values.
More impact investing products coming to market
In response to growing demand, more impact investing products will become available in 2023. Vanguard and other major players are launching new sustainable index funds and ETFs covering areas like renewable energy, sustainable agriculture and affordable housing.
Big potential for outsized returns
Many impact investment sectors, like cleantech, are poised for massive growth. This gives impact investors the potential for outsized financial returns over the long run. Vanguard estimates that sustainable equity funds could deliver higher returns of 2% to 3% compared to traditional funds.
In 2023 and beyond, impact investing with Vanguard and other leading providers will become increasingly popular. Investors recognize the potential for competitive returns and positive impact.