Interest and activity around impact investment have increased significantly in recent years as businesses, governments and communities seek new solutions to enable an inclusive and sustainable society in the face of social and environmental challenges. Philanthropists, charitable foundations and institutional investors have been among the early adopters in implementing impact investment strategies and developing the field. Despite the initial enthusiasm for impact investment, many investors raise concerns as they begin to explore the practicalities of impact investing. This paper responds to these concerns by providing empirical insights on how leading institutional investors and charitable foundations have begun to develop impact investment strategies and overcome various trepidations. The findings reveal four main themes: a focus on financial-first investments; the importance of using established due-diligence processes; the opportunity to align mission and values; and, the value of networks and collaboration.

Highlights: We interview retirement plan executives and survey members to investigate default asset allocation design  Executives do not allow for the low risk appetite of passive members  Executives mistake inactivity based on trust for inactivity caused by disinterest  Heterogeneity, trust and low skill of passive members support smart defaults

We interview Australian fund executives about how their organisations responded to MySuper, a regulatory framework for default retirement savings funds that providers were required to have in place by the beginning of 2014. We provide an account of the influences on MySuper product design. Our analysis generates insight into how fund providers balanced their perceptions of the needs of default fund members against business considerations. Differences in member bases and organisational circumstances across funds are found to lead to considerable variation in default fund design.

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