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Executive Perspectives

EXECUTIVE PERSPECTIVE: An example of innovative impact investing from UBS

Tim Nixon

04 May 2018

4 May 2018

The impact investing space is growing fast, both at UBS and in the marketplace, with USD 114 billion globally, according to a 2017 GIIN report, up from USD 25.4 billion in 2013.  Many different forms of impact investing are emerging, as providers seek to differentiate their offerings.  One new approach from UBS combines investing with philanthropy.

The actual vehicle is called the ” UBS Oncology Impact Fund”.  According to Andrew Lee, Americas head of sustainable and impact investing at UBS Global Wealth Management’s Chief Investment Office, “the goal of UBS’s oncology impact investing approach is to deliver measurable social impact as well as compelling returns by investing in cancer treatments and donating a portion of revenues earned by the fund manager and the treatments. In the case of cancer treatments that the fund helps develop or enable, potential impact metrics include patients’ lives saved, years by which their lives are extended, and number of patients treated.”

The fund was launched in April, 2016, and raised over $471m, making it one of the largest healthcare impact funds on the market.  Also interestingly, 60% of funds raised came from Asian clients, with the rest from other non-US clients. This is noteworthy given that the hubs of the sustainable and impact investing (SII) industry have historically been North America and Europe, and shows that SII is emerging as a global phenomenon.

All of the fund’s investors aim to generate competitive returns and none of them are philanthropic. However, the fund’s manager donates 20% of its performance fee to philanthropic causes. When third parties buy the treatments from the fund and commercialize them, each treatment will also donate a 1% royalty to the same causes.

According to Chris Bardon, managing director at MPM Capital (the fund’s manager), “the Fund recently announced a donation of $2.5 million to philanthropic causes as a result of its activities for 2017, the first full calendar year after the close of fundraising. Half will go to AACR for cancer research, and the other half to UBS Optimus Foundation to improve emerging market cancer care access.”

More partnership and philanthropy hybrid-type funds are likely to emerge as investors seek tangible and measurable evidence of benefit from their investments.

 

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