Tuesday, May 5, 2020

Impact Investing Decision And Policy †Myassignmenthelp.com

Question: Discuss about the Impact Investing Decision and Policy. Answer: Introduction: The investment decision can be defined as determining the suitable investment policy in accordance to the objectives of the investors. The investment decision-making process is, therefore, use to incorporate many techniques to select the best investment options, which can provide higher returns with comparatively lower risks. In modern days, it has been observed that the investment does not generate financial outcomes only but also create impact on social and environmental factors. The impact investment concept is used to measure the beneficial impact of any investment, made in any organization or funds, on the environment and society along with its financial return (Wilson et al. 2015). The stocks of Ping An Insurance Company of China, Ltd., which is an enlisted company in the Hong Kong Stock Exchange, are selected for the impact investment process. The various aspects, involved with the Ping An stocks, are critically analyzed to demonstrate its impact on socio-economic aspects of the organization and the financial return to its investors (Pingan.cn 2016). Overview of the Investment Fund: Ping An Insurance Company of China Ltd. uses to deal with banking, insurance and financial services with headquarters at Shanghai and Shenzhen in China. The last closing stock price of the company is 34.95 HKD as on 13/07/2016 with an annual dividend yield rate of 1.71%. Operating Model of the Fund: Ping An belongs to financial service sector. Therefore, its operational activities are closely related to its financing activities. Banks and insurance companies use to provide financial support to the people. Hence, Ping An may use its service providing activities to increase its market value and thus will get the scope to enjoy impact investing. Moreover, the companies, like Ping An, are one of the biggest source of employment. It would add additional value to the impact investing also. Financial Model of the Fund: The financial models are used to evaluate the financial performance of the investments in terms of return. Below-market investments are made basically to support the organizations or to fulfill non-financial objectives. The market-rate investments are made for the primary purpose of financial gains along with the secondary objective of creating positive impact on the socio-economic structure of the company. Ping An is an established company, therefore, the investors would not like to invest in the company just only for the benefit of the company. The investment can, therefore, be considered as market-based return investment (Taskforce 2014). Metrics of Measurement of Various Impacts: The metrics, which are used to measure the environmental social impact and financial performances against the benchmarks of any fund, can generally be classified into two types. There are detain metrics, which are used by the investors as standard metrics for any type of portfolio, whereas, others metrics use to be more investment or sector specific (Saltuk 2012). The suitable metrics for the Ping An stocks are shown below: Indicator Category Components Key Factor Indicators Access Client Base Demographics Client Profile Distribution Mechanics Number of Service points by Location Extent of Outreach No. of Beneficiaries touched Transaction volume and value Quality Financial product diversity fit Financial product breadth transaction by type Customer usage treatment Pricing structure by product compared to market Affordability Frequency of product usage Governance Processing times and complaints ratio Independents on board Markets Sector Evidence of financial sector deepening Innovation Additional capital attracted Talent No. of related complementary innovations Scale Conclusion: It can be stated that through the impact investment process, the investors of Ping An can have not only earn better return at lower risk but also can help the organization to provide better financial service to the clients and create more employment opportunity. Reference List: Pingan.cn. 2016.Company Profile-Investor Relations-Ping An. [online] Available at: https://www.pingan.cn/en/ir/summary.shtml [Accessed 15 Jul. 2016]. Saltuk, Y., 2012.A Portfolio Approach to Impact Investment: A Practical Guide to Building, Analyzing and Managing a Portfolio of Impact Investments. JP Morgan Taskforce, S.I.I., 2014. Impact investment: The invisible heart of marketsharnessing the power of entrepreneurship, innovation and capital for public good.London: Social Impact Investment Taskforce Wilson, K.E., Silva, F. and Ricardson, D., 2015. Social Impact Investment: Building the Evidence Base.Available at SSRN 2562082

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