In applying the “Total Portfolio Management Approach” to our assets under management, RS Group seeks to build a portfolio of varied asset classes and capital deployments, generating various types of returns across different segments of the portfolio. Cumulatively, these returns are projected to fulfill the financial and impact value creation potential of the capital base.
Broadly speaking, RS Group’s portfolio can be divided into three integrated allocations:
The SRI and TI investment segments are both expected to contribute to financial returns and positive impact in varying degrees, while the philanthropic activities are expected to contribute positive impact. Together, they are structured within the total portfolio to produce the optimal “Blended Value” outcome on financial, social and environmental returns from the available capital base.
To further illustrate how the Total Portfolio concept is integrated across RS Group’s portfolio, please refer to the following snapshot demonstrating the extent to which the investment and philanthropy portions of the portfolio are addressing different issues that are of concern to RS Group.
Total Portfolio by Impact Themes
Our Total Portfolio Policy Statement
Our total portfolio management strategy is governed by a Total Portfolio Policy Statement (“TPPS”). It provides a unified framework for defining the mission and purpose of RS Group’s total portfolio and aligns the Group’s activities to these objectives, detailing the guidelines for both the investment and grant-making activities.
Within our portfolio, all investments are expected to contribute to financial returns and positive impact in varying degrees. Long term financial return targets are qualified across asset classes, taking into account risk profiles and impact objectives. Aside from standard guidelines found in a traditional investment policy statement (e.g., risk, liquidity, currency / geographic concentration, etc.), the TPPS also includes guidelines for selecting and monitoring investments and managers according to impact criteria. A specific fossil fuel policy is also in place to guide the investment approach for coal, oil and gas related industries.
The TPPS also sets the minimum financial target return required in order to support an annual budget to cover grant-giving activities, Annie’s personal needs, and all administrative costs of RS Group. However, it is important to note that the grants budget is not solely dependent upon the returns from the investment portfolio.
The statement also specifies that the goal is to “generate financial returns in line with comparable traditional portfolios and to maximize its contribution to the RS Group mission. ”This was included to demonstrate it is possible to achieve comparable market returns while meeting impact objectives and ensuring capital preservation. However, in the future, RS Group intends to be flexible and open to revisiting these targets and objectives.
RS Group, like many other family offices, has chosen a pragmatic approach for the governance of its Total Portfolio activities. It uses a trust structure overseen by a trust company whose board consists of individuals with a strong, traditional investment background. An advisory board, which includes RS Group’s principal, provides guidance on strategy and pre-screening of both philanthropic and investment opportunities. In addition, the working team, with the support of its external investment advisor, Ivo Knoepfel, and philanthropy advisor, Anna Wang, are in charge of the selection and monitoring work.
At the beginning, the trustee board was concerned about the complexity of combining the dual goals of financial and social / environmental returns into one portfolio. The clarity provided by RS Group’s Total Portfolio Policy Statement (as referred to above), and a clear segmentation of a lower risk “core” and a higher risk “satellite” allocation reassured the board and helped it fully understand the Total Portfolio approach. Although board members largely have a traditional investment background, they have given their full support to the Total Portfolio approach.