Highlights from the 16th Mission Investing Institute hosted by Mission Investors Exchange

As previously mentioned, we are members of Mission Investors Exchange, and so I attended their Mission Investing Institute in March of this year, which was extremely informative and altered my mindset in a few ways. For instance, Several speakers stated that “all investing is impact investing.” In other words, every investment has an impact, it is a matter of whether or not investors examine the impact of investments not specifically categorized as “impact investments.”

My greatest takeaway from the conference was dispelling the myth that impact investments sacrifice portfolio performance. William Burckart, President and COO of The Investment Integration Project (“TIIP”), justified this claim by showing the relative outperformance of impact investments, as represented by the MSCI KLD 400 Social Index (+10.7%), compared to the broad market, S&P 500 Index (+10.2%), on an annualized basis from May 1, 1990 to December 31, 2018. TIIP’s website references a 2015 Harvard Business School working paper titled “Corporate Sustainability: First Evidence on Materiality,” which concluded that “firms with strong ratings on material sustainability issues have better future performance than firms with inferior ratings on the same issues.”

Daryn Dodson, Founder and Managing Director of Illumen Capital, shared a related and yet unique perspective. Illumen is “the world’s first private equity firm dedicated to reducing implicit bias across financial markets to unlock returns and impact,” according to the Stanford Graduate School of Business. Daryn pointed to a McKinsey research report titled “The case for behavioral strategy,” which concluded that companies making unbiased strategic decisions improve return on investment by 6.9% as compared to those companies making biased strategic decisions. Specifically, a company can counter social biases by stimulating genuine debate, which requires diversity in the backgrounds and personalities of the decision makers. Daryn referenced this research in his argument that funds managed by a set of racially diverse managers relatively outperform funds managed by an undiversified group of managers.

In addition to learning a great deal, the institute also provided ample networking opportunities, which proved beneficial and further enhanced my research and implementation of values-aligned investments. For instance, I met the tenured Chief Investment Officer of another single-family office who also manages the portfolio for the family’s foundation, and he happily shared the foundation’s Investment Policy Statement with me, which described their unique approach to investing and portfolio construction. In my opinion it is helpful to explore relevant case studies and learn by the example of experienced and intelligent individuals.


Brittany Priester

Brittany Priester

Portfolio Manager

Stiletto Swagger

On May 11th I had the pleasure, or pain as I would come to find out, of donning some pink high heels and walking down a runway in front of hundreds of people, including Charlotte’s own, Miss USA 2019 Cheslie Kryst.  It was for a great cause and was to raise money for Dress for Success which aims to promote the economic independence of women by providing a network of support, professional attire, and the career development tools to help women thrive in work and in life. The Gambrell Foundation has been a long-time supporter of Dress For Success, and Sarah Belk Gambrell was honored with the 2014 Paradigm award.

I was able to raise almost $3k and the swagger in total raised almost $36k for the cause.  While my performance was less than stellar, I was able to stay upright, which could not be said for everyone on the runway.  Some guys brought their dogs, others brought their children, but everyone brought a sense of awkwardness.  The experience was a great time, not only for the participants, but for the crowd as well and we were able to raise some money which made it all worthwhile.


Matt Potter

Matt Potter

Controller

Values-Aligned Investing: Forging Our Unique Path

As I previously shared, a lack of standardization exists within the Values-Aligned Investing space. So, we charged our own path and created a proprietary investment framework. The first strategic decision we encountered was whether to take a “lens” or “sleeve” approach when implementing this new investment strategy. A lens approach applies the investment strategy to the entire portfolio; whereas, a sleeve approach carves out a piece of the portfolio and applies the investment strategy solely to that piece, while leaving the balance of the portfolio unaffected. We opted for the sleeve method in order to test this new approach on a piece of the pie to ensure it is a strategic fit for the foundation. This approach is not set in stone and will surely evolve over time alongside the ever-changing investment industry.

Next, we devised a proprietary investment framework. We started by selecting the term “Values-Aligned Investments” (“VAI”) as the overarching header for the newly designated investment sleeve. We chose this terminology because it encompasses any investment that aligns with the values of the foundation. This phrasing is sufficiently descriptive while also affording us the flexibility to incorporate a range of investing styles, which we describe as investment subcategories under the VAI header. All VAI subcategories have one primary feature in common in that that they seek both a financial return and non-financial return. A financial return is a return on investment in the conventional sense. For example, a company’s stock price increases from $10 to $12, thus generating a financial return of 20%. A non-financial return is not as easily measured and can take various forms, including social, environmental, impact, etc. For instance, a company generated 16.7 TWh of renewable energy (wind, hydroelectric and solar), thus avoiding 11.8 million metric tons of CO2 emissions, and ultimately avoiding 0.03% of annual global CO2 emissions (i.e. the environmental return).

More to come on the foundation’s specific VAI subcategories in subsequent blog posts…


Brittany Priester

Brittany Priester

Portfolio Manager