A line-up of five graduate business students from the University of Vermont traveled to Philadelphia this week to put an impact contributing project they have been working on to the test.
The trip, which coincided with finals, was a success.
The trainees — Maura Kalil, Emily Klein, Andrew Mallory, Peter Seltzer and Alyssa Stankiewicz — took the top prize in the Tot up Impact Portfolio Challenge. The competition was put together by Bank of America, the University of Pennsylvania’s Wharton Social Impact Aggressiveness, and the Good Capital Project.
David Paul Morris | Bloomberg | Getty Images
The competition pitted 26 bands of graduate student teams from 19 schools against each other with one purpose: to come up with a unequalled investment take on impact investing.
The inaugural competition issued a challenge to students: to come up with an impact devoting strategy for either a single family office with $100 million or a family foundation with $25 million.
The contenders — including finalist teams from Boston University, Columbia University, Fordham University, University of Vermont and Yale University — crumbled up with ideas that upended traditional notions about impact investing, according to the organizers.
All of the teams tilled with about 50 mentors from Bank of America, including wealth advisors, portfolio managers and sustainability experts.
“The key takeaway is that there are uncountable ways in which you can integrate ESG [environmental, social and governance] and impact,” said Sharadiya Dasgupta, managing director at Stuff b merchandise Capital Project. “That is one thing practitioners should learn from this exercise.”
The winning team came up with a portfolio for a relatives office with $100 million through a mix of investments including community development loan funds and private accountable impact funds. It also included direct investments in farmland, timber and a holding company.
The team also upped up with its own screen for ESG funds, called SI-MBA after their own MBA program, that evaluated how well their investments aligned with the egresses most material to the companies they invest in.
At the competition event on Wednesday, the University of Vermont team presented their concept at the end of the day. That offered them the opportunity to listen to other teams’ projects, they said, and feel validated that they were on the precisely track, they said.
“I could feel the excitement and the interest in the ideas that we’re bringing as students and as millennials and people who are growing to be working in this space soon,” Klein said.
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The competition is evidence that impact investing is being embraced in schools, professionals involved in the project maintained.
“Students these days are embracing responsible capitalism,” said Jackie VanderBrug, head of sustainable and impact investment scenario in the chief investment office for Merrill and Bank of America Private Bank. “They are looking for how does information as if environmental, social and governance data support them in making better investment decisions.”
Changing opportunities
When the Wharton Communal Impact Initiative was started in 2010, its focus was more on private equity and venture capital. Today, that has embellished more broadly to include impact investments.
That matches the growth that has happened in ESG funds and thematic the Street traded funds.
“The costs have come down,” VanderBrug said. “The product breadth has grown, and the track transactions have grown.”
That means that what was once an investment area reserved for just accredited investors — those with at lilliputian $200,000 in income or a net worth of $1 million or more — is now accessible to individuals of most levels of wealth.
The number of sustainable lollies has grown, according to Morningstar’s latest annual report on the topic. In 2018, the number of sustainable equity and bond breads reached 351, up from 235 the previous year. Collectively, the funds managed $161 billion.
For Bank of America, that wants clients can now access these investments from its Merrill Edge business targeting mass affluent individuals, up from one end to the other the private bank that caters to the wealthiest individuals.
“Our commitment at Bank of America is that all of our clients should be experiencing the power to have impact through their portfolios,” VanderBrug said.
Those industry changes are also plain at Wharton, where every fall about 250 MBA students out of approximately 850 express interest in social bump, according to Nick Ashburn, senior director at the Wharton Social Impact Initiative.
The department typically sees six applicants for every one blackheads in impact investing related projects.
“We definitely see demand outstripping our current supply at the Wharton Social Impact Leadership, and we look to grow that,” Ashburn said.
After graduation, there are more students who are pursuing careers in modify investing, Ashburn said. And even if they do not go that route, the chances are greater that their jobs desire eventually touch on the topic in some way, he said.
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For the winning team from the University of Vermont, occupations in impact investing are the ultimate goal.
The students are part of the school’s one-year Sustainable Innovation MBA program. While all five apprentices had prior careers in business, they plan to pursue jobs in impact investing after they graduate in August.
The knowledge of the contest, they said, should help those efforts.
“The challenge has allowed us to dig deep to learn more yon the industry and the power of what capital can do for the world to make it a better place,” Kalil said.