Customizing a portfolio to match a family foundation’s mission

A family foundation was frustrated with investment experts who dismissed its social concerns and social experts who lacked investment acumen. Aperio worked with the family to define their values and create a custom portfolio that tracked a standard benchmark: the Russell 1000.

Challenge

A family foundation wanted to match its investments with its mission, while engaging the younger generations of the family in the process. The foundation focused on three mission areas: early childhood development and education, environmental stewardship, peacemaking activities. The foundation’s directors wished to align the portfolio with their desired social impact without sacrificing investment returns.

Aperio solution

Aperio worked with the family to define their values using a multi-stage questionnaire process to make clear the specific environmental, social, and governance (ESG) issues so important to the directors of the family foundation. Then Aperio took advantage of social research databases that compile ESG performance on each issue to create a social score for each company that reflects the family’s unique values. Finally Aperio’s optimizers were used to build a portfolio to track the chosen benchmark, the Russell 1000. Once the portfolio was created, the risk from incorporating values could be measured, making the whole process of ESG investing less mysterious.

Impact

Family foundation achieved ideal alignment between its mission and its investments.  One of the key benefits for the foundation’s Director was the opportunity for the family to talk with each other about the issues that mattered to each member.  The foundation’s Director now works with other family foundations to espouse the importance of and opportunity in aligning values with investments.