Closer Look at Values-Aligned Investment Framework

As depicted in the below illustration, the foundation’s portfolio is comprised of two overarching buckets: Classic Investments and VAIs. 

Classic Investments consist of traditional holdings, such as shares of Google or a U.S. corporate bond, which we only track the financial return. 

The second bucket, VAIs, comprises traditional holdings analyzed via an unconventional lens tracking both the financial return and non-financial return (e.g. impact return, social return, environmental return, etc.) Within VAIs, there are three groupings: zero-rate investments (i.e. grants) produce no return, below-market investments (e.g. Program-Related Investments or PRIs) yield subpar returns and market-rate investments generate competitive returns. 

Grants are self-explanatory and other sections of the website elaborate on the foundation’s grant making. 

Within market-rate investments, we classify investments into the following three subcategories:

  1. Socially Responsible Investments (“SRI”), or Environmental, Social and Governance Investments (“ESG”), is the broadest grouping comprised of companies that adhere to sound business practices while providing services and products that do not solely target social or environmental issues. For example, Cisco Systems is an American technology company that emphasizes environmental sustainability as evidenced by renewable energy accounting for 80% of the company’s worldwide electricity use.
  2. Impact Investments have a narrower focus than SRI/ESG investments, including companies whose core products and services exclusively address the world’s largest social and environmental problems. For instance, CT Environmental Group is a Chinese wastewater company uniquely positioned to impact the health and well-being of China’s population and its natural environment, targeting an urgent social and environmental concern provided widespread pollution has strained China’s water resources.
  3. III.Mission-Related Investments (“MRIs”) is the most concentrated subcategory provided it targets investments in companies whose activities are explicitly aligned with the foundation’s unique mission. Provided education is one of three pillars of The Gambrell Foundation’s mission, an investment in SEEK, an Australian company that matches underserved working-class job searchers with employers and offers online training and education in an effort to address the education and training gap, is an example of a MRI for this specific foundation.

Provided the uniqueness of PRIs, I will elaborate on them in a separate article given they warrant a more in-depth analysis. 


Brittany Priester

Brittany Priester

Portfolio Manager

Debunking the Myth that Values-Aligned Investments Forgo Financial Performance

Before delving into our unique values-aligned investment (“VAI”) framework and implementation, I would like to summarize and reference additional academic studies, which further dispel the myth that one sacrifices financial return when participating in VAIs. 

CFA Institute Research Foundation in collaboration with Swiss Sustainable Finance published the Handbook on Sustainable Investments in 2017, which summarizes that “there is ample academic evidence that ESG parameters have a positive influence on the returns from financial assets.” For instance, a 2015 MSCI research report titled “Can ESG Add Alpha?” found that over an eight-year period, the ESG portfolio relatively outperformed the global benchmark by +1.1% per year. 

In 2016, Barclays Research published a report titled “Sustainable investing and bond returns,” which concluded that ESG factors “can be applied to credit markets without being detrimental to bondholders’ returns.” Furthermore, bonds with a positive ESG tilt delivered “a small but steady performance benefit.” In 2018, Barclays Research expanded upon their study with an updated report titled “The case for sustainable bond investing strengthens.” The recently updated report confirmed that credit portfolios favoring bonds with high ESG ratings, while keeping all other risk factors unchanged, led to higher returns. Specifically, from July 2009 – March 2018, U.S. and European investment grade bonds with high ESG ratings consistently outperformed those with low ESG ratings. For example, in March 2018, U.S. investment grade bonds with high ESG ratings relatively outperformed by +2.4%.

Similarly, the Journal of Banking and Finance published an article in 2016 titled “The effect of social screening on bond mutual fund performance,” which compared the risk-adjusted performance of more than 100 ESG-focused fixed income funds in the U.S. and eurozone against a sample of conventional fixed income funds. The analysis concluded that over a 13-year period, the ESG funds relatively outperformed by +0.5% annually, which is a noteworthy margin for fixed income investing. 

Provided the foundation does not have to sacrifice financial performance in order to participate in VAIs, we incorporated a VAI sleeve into the foundation’s portfolio in 2018. We believe that the foundation’s corpus can be invested in such a way to generate both a competitive financial return while simultaneously achieving a positive impact, or non-financial return. 


Brittany Priester

Brittany Priester

Portfolio Manager