An ongoing debate regarding values-aligned investing (“VAI”) is whether or not one must sacrifice financial return in order to generate a positive non-financial return. Our position on this matter is best explained through tangible data points. Please see below for a recap of how the foundation’s unique VAIs performed in 2019.

  • The Wellington Global Impact Fund invests in the equities of U.S. and non-U.S. companies whose primary purpose is to address the world’s major social and environmental challenges. As the name implies, we classify this investment as an impact investment within VAIs. In 2019, Wellington Global Impact (net +29.8%) relatively outperformed its benchmark, the MSCI ACWI Index (+27.3%) by +2.5%. 
  • The foundation also purchased a 5-year taxable Charlotte Housing Bond on August 7, 2019. This investment is classified as a mission-related investment (“MRI”) within VAIs since it specifically aligns with the foundation’s mission, namely it’s focus on vibrant communities. Even though it has only been a few months, the Charlotte Housing Bond (net -1.0%) relatively underperformed both the Bloomberg Barclays Municipal Bond 5-Year Index (+0.3%) and Bloomberg Barclays U.S. Aggregate Index (-0.1%). 
  • As highlighted in a previous article, the foundation also owns two Self-Help Women & Children CDs, which are categorized as MRIs provided alignment with education and vibrant communities, two of the foundation’s three areas of focus. Given the short duration of CDs it is more appropriate to compare yields as opposed to returns. The 12-Month Self-Help Women & Children CD annually yields +1.8%, outperforming Bank of America’s 13-Month Featured CD at 1.4%. Similarly, the 24-Month Self-Help Women & Children CD annually yields +1.9%, beating Bank of America’s 25-Month Featured CD at 1.0%. 

At the time of writing this article, Barron’s published its list of the 100 most sustainable companies in the U.S. In 2019, if you held a portfolio comprised of stock in each of these 100 companies, then you would have generated an average return of +34.3%, relatively outperforming the S&P 500 Index at 31.5%. In fact, 55 out of these 100 most sustainable companies beat the index on an individual basis. 

In summary, sometimes a VAI will financially underperform (e.g. the Charlotte Housing Bond), while still generating a positive non-financial return. However, our experience demonstrates that VAIs outperform both financially and non-financially the majority of the time. 

Brittany Priester

Brittany Priester

Portfolio Manager