Reduces risk through alternatives
Portfolio managers virtually all claim to spread risk by appropriate asset diversification, but this often comes down to a simple split between bonds and equities, with little or no allocation to alternatives. 3D investing offers a much wider choice of assets including microfinance, social property and infrastructure. These ‘alternative’ assets are relatively uncorrelated with more traditional investments, being less directly influenced by supply and demand of the main market. They may also be underpinned by predictable, long-term revenue streams that makes them financially attractive, especially for income seeking investors. As part of a diversified portfolio, they can, therefore, contribute to reducing overall risk.
Seeks to inspire investors
Investment is commonly reduced to facts and figures. Indeed some investment analysis discusses numbers without even stating what the company does! Socially motivated investors are rarely persuaded by discounted cash flows or P/E ratios, and unlike more conventional investors, often want to know a lot more about what their investments actually do. 3D investing therefore seeks to inspire investors, to get investors excited about their money and what it can achieve. This means extensive profiling of investments, impact analysis and regular reporting.