As previously mentioned, we are members of Mission Investors Exchange, and so I attended their Mission Investing Institute in March 2019, 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