Welcome back to "On the Horizon," a series dedicated to meeting opportunities, initiatives, and people at the forefront of creating a brighter tomorrow. Today, we dive into a conversation with Snowball Impact Management. We spoke with the team at Snowball to learn more about their innovative fund of funds, their approach to sustainable investing, and the future they envision.
Please can you introduce us to Snowball?
Snowball is on a mission to change the way that financial markets operate, and to show it is possible to create a positive, measurable and sustainable impact for people and our planet, whilst also generating competitive risk-adjusted financial returns.
Snowball is an FCA regulated fund manager, investing on behalf of its investors into a diversified portfolio of public and private impact funds managed by best-in-class managers. Snowball was originally founded in 2016 by Panahpur, Golden Bottle Trust, Friends Provident Charitable Foundation, Skagen Conscience Capital, The Taylor Family Foundation, and Gower Street and launched to external investors in 2020 under the stewardship of the current team. We are working to allow everyone to invest in line with their values, and our whole organisation is built around the impact we aim to deliver. We are backed by not-for-profit founding shareholders, our mission is written into our articles of association, and we are a certified B-Corporation. We are also in the top 5% of all B Corporations globally for the governance structure established by its founding investors.
Where do you stand against the more typical sustainable funds and how do you distinguish yourself against the more 'mainstream' sustainable funds?
We believe we are different to mainstream sustainable funds in a number of ways:
Wider and deeper positive impact: We are on a mission to change the way that financial markets operate, and to show it is possible to create a positive impact for people and our planet, whilst also generating a sound financial return. We are working to allow everyone to invest in line with their values delivering the “additionality” which is a key component making up an impact investment. For example, we often provide the first line of “institutional” capital to catalytic funds (and their underlying companies).
Proven track record: We believe we are one of the only impact investment fund of funds that spans the capital spectrum of public and private investments, as well as having a seven-year track record. We have developed a specialised impact strategy across a blend of asset classes, diversifying risk and therefore uncorrelated to market downturns and we can optimise risk-adjusted returns by carefully managing the exposure relative to market environments and events.
Pioneering impact investing and assessment: In order to navigate the growing market and be able to select the best-in-class managers that can deliver the greatest impact as well as financial returns, we have developed, in house, an award-winning impact assessment framework. Our Bullseye framework is a critical tool in measuring, comparing and tracking the impact intensity of different investments. It captures a wide variety of elements of both the fund manager and its underlying holdings – the former includes mission and behaviours, impact processes, reporting & transparency and active ownership, the latter is based on the Impact Management Project’s framework. Scores are then aggregated at asset class and fund level.
Existing NAV and portfolio: The fund has 48 investments with over 800 underlying holdings. Since inception, the Snowball Fund has largely tracked, or at times outperformed comparable investment products. New investors subscribing to the Fund come in at the prevailing NAV per unit, and will benefit from the mature nature of the funds in the portfolio.
An efficient fee structure: Flat 1% management fee with no extra charges. The fee will reduce as the fund grows, with the benefits of scale passed onto the investor.
What areas of sustainability are you focusing on?
The Fund invests across two interconnected themes: Environmental sustainability and social equity and maps the portfolio to six sub-themes and the UN Sustainable Development Goals.
The six impact themes are:
- Health & Well-being
- Equity & Inclusion
- Homes & Communities
- Energy transition
- Regenerative ecosystems
- Resource efficiency
Can you tell us about some of your specific holdings from the themes you mentioned above?
One of the Fund’s investments is Aquaspark, which invests in small and medium-sized enterprises in the sustainable aquaculture business. Aquaspark’s mission is to move the aquaculture industry towards healthy, sustainable and affordable production. It invests in companies across the value chain including alternative feed ingredients, health and disease prevention, and farm management technology, to achieve wider systems change. One of its investments is eFishery, which has developed a smart feeder device to help fish farmers optimize feeding, improve fish health and water quality, whilst reducing waste and improving profits. In 2023, eFishery became the first aquaculture startup to reach a valuation of over $1bn.
Another investment is in Bridges Social Outcomes Fund, which invests in outcomes-based contracts typically commissioned by local authorities to improve the life chances of underserved groups, including children on the edge of care, the homeless, or vulnerable adults. These interventions are evidence-based and closely monitored to ensure outcome targets are met. One of these contracts is Pause, which provides services to women who are at risk of repeat removals of their children into care. The outcome of the contract is not that the women get their children back, but that they engage with support to focus on themselves, increasing their health, well-being, and employability, and taking a pause from pregnancy.
Can you explain a little more about the reasoning to have a blend of public/private?
Snowball invests in the best managers in each asset class, across both public and private markets. This level of diversification reduces volatility to a third of public equity markets. We believe that private markets are where the greatest level of impact can be achieved given the longer-term investment horizon, while public markets act as a potential source of liquidity to our investors.
Who are your typical investors and what do they like about this opportunity?
Most of our investors are family offices, high-net-worth investors, and charitable foundations. We recently welcomed a local authority and a faith-based investor. Their key motivations for investing in Snowball are our authenticity, knowledge around impact investing, balanced approach towards risk, return, and impact, the quality of our reporting, and the opportunity to join a community of like-minded investors.
How have you seen investor demands changing?
We have recently observed a clear shift in the mindset of wealth managers who have been approaching Snowball in ever-increasing numbers. This appears to be driven by many factors, but we have pulled out the three that have been most commonly cited. Firstly, many of their clients who have a deep-rooted interest in protecting the climate and biodiversity or tackling inequalities, are demanding that they find suitably impactful investment opportunities – this is forcing wealth managers to expand their horizons. Secondly, the impact investment market has matured and there is increasing amounts of data that disproves the belief that it is higher risk and/or lower returning. Thirdly, in a volatile market, they are finding that impact investments can play an important part in a diversified portfolio strategy.
For more information, please reach out directly to Henry Bacon, Head of Investor Relations via henry.bacon@snowball.im
Snowball offers a unique and forward-thinking approach to investing. As they continue to innovate and expand, their model offers a glimpse into the future of sustainable finance.
If you'd like to discover whether Snowball or other similar opportunities would align with your client's unique values, please get in touch for a demo of the Etcho tool.
Stay tuned for more insights from leaders shaping a brighter tomorrow in our next edition of 'On the Horizon'.
Please note that Etcho does not provide financial advice, and any advice should be sought from a professional. Etcho aims to provide information for discovery purposes only. This blog is for informational purposes only and should never be considered investment advice.