EQ Investors backs new London-listed impact investment trust

First-of-its-kind investment trust aims to deliver positive social impact in the UK as well as long-term capital growth.

by Daniel Bland, 1st March 2021

The Schroder BSC Social Impact Trust, created by Big Society Capital in partnership with global investment manager Schroders is the first time a trust dedicated to impact investing had gone public on a stock exchange.

Obtaining highly impactful private market exposure has previously been the preserve of institutional investors – due to high investment minimums and partnership fund structures. The launch of this unique social impact trust provides access to a diverse mix of social impact investments at a time when social issues are understandably at the forefront.

Why private markets?

An increasing number of investors are broadening their asset allocation across private markets – with the objective of obtaining exposures that can complement listed assets and have the potential to generate attractive risk-adjusted returns. Capital allocated to private markets has tripled since the global financial crisis from $2.5 trillion to $7.7 trillion today.

Using investment trusts to invest in private markets isn’t new. We already use a number of London listed companies such as Greencoat UK Wind and NextEnergy Solar to directly invest in renewable energy infrastructure assets, that are helping expand the UK’s renewable energy capacity. Recent years have also seen launches of property funds (REITs), with the likes of Home REIT, Civitas and Triple Point aiming to increase the supply of social housing.

High impact themes

One of the reasons we’re excited about the Schroders Big Society Capital Trust is that the strategy targets several high impact themes, working with experts in their respective fields. Ordinarily these third parties are inaccessible to most investors. These underlying managers specialise in areas such as high impact social housing, investment in social enterprises to directly finance community-based projects, and social outcome contracts which are exclusively accessible to retail investors through this trust.

Looking ahead

Importantly, the board are aiming to significantly grow the size of the trust, offering plenty of opportunities for investors to participate and provide additional capital. The trust aims to provide a net asset value total return of CPI plus 2% once the portfolio is fully invested, over rolling three to five-year periods, and is expected to target a portfolio size of £300-500m within five years.