Long-run Returns to Impact Investing in Emerging Market and Developing Economies

There is growing interest in impact investing, the idea of deploying capital to obtain both financial and social or environmental returns. Examination of every equity investment made by one of the largest and longest-operating impact investors across 130 emerging market and developing economies shows this portfolio has outperformed the S&P 500 by 15 percent. Investments in larger economies have higher returns, and returns decline as banking systems deepen and countries relax capital controls. These results are consistent with imperfect integration of international capital markets and the thesis of impact investing that some eligible markets do not receive sufficient investment capital.