Impact investing is a relatively nascent type of investment strategy that has gained steam in the past few years. Traditionally, impact investing directs capital toward companies that generate some social or environmental benefit to the world in addition to producing financial gain from fund returns.
A report by the World Bank’s International Finance Corporation (IFC) found that $2.3 trillion (1) were invested for impact globally in 2020, with the asset class seeing significant growth during, and because of, the pandemic. That figure includes private funds and institutions as well as publicly owned development finance institutions and development banks.
The key attributes (1) that differentiate impact investing from other forms of environmental, social, governance (ESG) or Socially Responsible Investing (SRI) include having specific intent, credible contributions, and measurement systems. Yet investors still consider a company’s ESG rating and other corporate social responsibility (CSR) indicators when choosing to invest.
The same issues that are present in ESG investing, that environmentally and socially conscious terms are ill-defined and lack significant oversight from a governing body like the SEC, persists in impact investing. This vagueness opens the door to greenwashing in the impact investment landscape. The actual intended impact of an impact investment may not be known or accurate in cases where the selection of companies for an impact investment fund is based on such principles. The ICF report (1) found that of the estimated $2.3 trillion in impact investing, only about a quarter (roughly $636 billion) were able to measure their impact.
In partnership with RiverNorth and Folds of Honor, TrueShares offers an ETF that symbolizes a new frontier for impact investing. The RiverNorth Patriot ETF (FLDZ) goes many steps further than funds focused on meeting ESG or SRI principles in that the profits and a majority of fund fees are donated directly to Folds of Honor, a 501(c)(3) non-profit focused on providing education and scholarships to families of veterans and first responders who were disabled or killed in action. Since its founding in 2007, Folds of Honor has averaged 91 cents of every dollar raised going to their scholarship program. The non-profit has awarded over 44,000 educational scholarships since 2007, with 6,500 scholarships awarded in the 2021-2022 cycle alone. Minority recipients represent 41% of all scholarships awarded.
FLDZ seeks capital appreciation by investing in mid to large cap companies. To be included in the fund, companies must be U.S. domiciled, have U.S. listed equities, generate at least 90% of revenue in the U.S., and have a market cap over $5 billion. As far as impact investment is concerned, FLDZ flips the strategy on its head by allocating fund profits and fees toward an impact as opposed to selecting fund holdings based on their individual impacts. FLDZ has clear intent, credible and transparent contributions, and measurable and specific impact while offering an alternative to philanthropy in a way that is simple, transparent, and, yes, impactful.
Learn more about RiverNorth Patriot ETF (FLDZ) at www.truesharesetfs.com/fldz.
The TrueShares RiverNorth Patriot ETF is subject to the following risks: Equity Market Risk – securities held in the Fund’s portfolio may experience sudden, unpredictable drops in value or long periods of decline in value. Market Events Risk – Markets have experienced significant periods of volatility in recent years due to a number of economic, political and global macro factors, including the impact of the coronavirus (COVID-19) pandemic and related public health issues, growing concerns and uncertainties regarding interest rates, trade tensions and the threat of tariffs resulting in volatility and negative impacts on asset prices, liquidity of certain securities and normal operations of the securities markets. New Fund Risk – The Fund is a recently organized investment company with no operating history. Other Potential Risks – The Fund may invest in ‘when-issued’ securities; preferred stocks; rights/warrants; tracking stocks; investment company securities/pooled investments; REITs; and repurchase agreements. Investors should read the Fund’s prospectus for more information related to these risks.