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Retail investors take the largest slice of the impact pie

Retail investors were the fastest-growing and largest group of any investor type in impact investing AUM in 2015, according to the Global Impact Investing Network’s annual report.

Retail investors represented 29 percent of total assets under management in the impact investing segment, making it the largest source of capital for impact investing, according to The Global Impact Investing Network (GIIN).

The figure was a key takeaway from GIIN's most recent report, Impact Investing Trends: Evidence of a Growing Industry, which the firm released on Wednesday at the Investor Forum 2016 hosted jointly by the GIIN and Private Equity International.

The amount of capital from retail investors managed by impact fund managers grew by a whopping 89.8 percent in 2015, according to GIIN, to $4.01 billion, up from $2.16 billion in 2014, and $2.15 billion in 2013.

“Retail investors traditionally haven't been a significant source of capital for fund managers in impact investing, largely because many private funds aren't available to retail investors,” the GIIN research director Abhilash Mudaliar told PEI. “There was a lot of conversation today [at the forum] around how to develop more products available to not just high-net-worth investors, but to retail investors.”

Mudaliar noted that two retail investors made exceptionally large contributions, driving the allocation to impact AUM.

The second largest source of capital was pension funds and insurance companies, which were grouped together, and took 25 percent of the total AUM with $3.5 billion. That was up 14 percent from the $3.04 billion in 2014 and 54 percent from $2.25 billion in 2013, the report said.

Total AUM in impact investing stood at $14.1 billion in 2015, up 20 percent from 2014 and 40 percent from 2013, highlighting the popularity of the strategy with investors. Impact AUM focused specifically on private equity rose as well, with $8.6 billion in 2015, up 17 percent from $7.35 billion in 2014 and 52 percent from $5.68 billion in 2013, according to the report.

Alongside the increase in AUM, capital raised by fund managers also inched up. Last year, impact fund managers raised $2.31 billion, 2 percent above the $2.25 billion raised in 2014 and 37 percent higher than $1.68 billion in 2013.