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Rating:Can a Socially Responsible Alt Thrive? Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, March 07, 2014

Can a Socially Responsible Alt Thrive?

Reported by Tommy Fernandez

When Russia invaded the Ukraine at the beginning of this week, a number of funds saw a dip in performance due to the reaction of the equity markets.

However, an alternative fund run by, of all things, a community development specialist, saw its performance soar, at or near to the top of its investment categories.

The 10-month old fund, named the CCM Alternative Income Fund, may well serve as an augur of the opportunities 2014 seem to offer Community Capital Management, a $2 billion manager which runs CCM as well as the 15-year old CRA Qualified Investment Fund.

The 15-year-old CCM specializes in social impact investing, such as community development, affordable housing, small business, and so on. A lot of its investing, for example the investing underlying the CRA Qualified Investment Fund, includes agency mortgage backed securities like those guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae, as well as municipal and public agency debt and securitized small business loans.

"We specialize in doing good and making it palatable to investors," said David Sand, who was hired last year to serve as CCM's chief investment strategist. "Our clients are looking for a competitive return, and will take the time to research these assets that a bond broker relying on a Bloomberg screen would never touch."

CCM initially nurtured its fund business by selling to banks and other lending institutions, catering to the Community Reinvestment Act requirements these financial service providers had to meet in terms of local investment.

Jamie Horwitz, senior vice president for institutional marketing, said that although banks continue to be an important channel for CCM, the firm has steadily expanded its footprint, launching retail and institutional class shares for CRA fund in 2007, and taking on its first pension client in 2006.

Sand said that the CRA Qualified Investment Fund is on most of the major supermarkets and platforms. The big push this year will be to accomplish the same with the CCM Alternative Income Fund.

Of course, the first big obstacle will be meet the asset requirements for many of the platforms, but Sand has observed a couple of platform trends which they think may favor them.

The first is the steady demand for alts products. The second is a nascent demand for socially responsible investments.

Sand says that in the past, marketing of SRI funds was largely grass roots, driven by individual investors or groups with a die-hard interest in investments that aligned with their social values.

Now, he said, platforms are starting to seek out such funds to add to their lineups, even in some cases developing SRI product lists.

Further, some ultra high net worth investors have been drumming up support for the products, he added.

"In the past two years, all of the major wirehouses and fund supermarkets have been setting aside resources to develop socially responsible platforms," Sand said.

Consequently, CCM is ramping up its outreach efforts this year in the retail market.

"We are still a boutique by the standards of the industry, but right now we have a great opportunity to add significant assets to our products," he said. 

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