The Risk and Return of Impact Investing Funds

This paper provides the first comprehensive analysis of the risk exposure and risk-adjusted performance of impact investing funds. Utilizing a new dataset of impact fund cash flows, it characterizes their risk profile relative to benchmarks, particularly venture capital funds. The study finds that impact funds exhibit a lower market beta than comparable private market strategies. While underperforming the public market when accounting for market risk, they do not underperform more than other private market strategies, offering crucial insights into their financial properties.