TOTAL BLENDED RETURN
A simple concept that allows everyone involved in the Blended Value space (combining financial with non-financial values) to use a common language in order to establish a clear and logical pathway to implementing their own chosen strategy.
Our objective is to allow the recognition that there is no ‘definitive’ methodology, terminology or process involved, but there is a common acknowledgement that any shift in a family’s approach to investing is a step in the right direction.
Our starting point is an understanding that the current investment process is undertaken with an assessment of pure ‘risk adjusted return’ with no consideration of the ‘non-financial’ implications of the investment.
We are seeking to establish a process where ‘non-financial’ implications and the ‘values’ of the family are brought to the table when an investment decision is made.
We have simplified the spectrum of ‘non-financial’ and ‘values’ driven strategies into four distinct categories:
Whilst recognizing that there are no agreed definitions, nor any clear cut off from one category to the next, the common understanding of these terms is both understood and can be communicated by all involved in the process.
TOTAL BLENDED RETURN
The idea behind the G9 Council is to bring together the pre-eminent experts, interest groups and organisations involved in the various aspects of this space to speak with a common language which will add a credibility to the dialogue and encourage more families to move this from a discussion to an actionable programme of activity.
Within the framework of the TBR philosophy, we encompass two principles that we all agree on:
The investment process should take into consideration all of the values of a family and not just the financial expectations.
The principle of ‘blending’ values should apply to the whole portfolio and not just a component of it.
Within the TBR portfolio there is room for argument about the various aspects of the risk/return/values decision and we welcome competitive advocacy for our Council members chosen programmes. We do not believe that the continuum represents a decrease in anticipated financial return as the focus on ‘Impact’ increases.
We have created a TBR score which allows a family to determine its start point on this journey and to measure the impact of the application of this new philosophy on its portfolio. This of course is not an exact science and it is not our objective to encourage every family to aim for a TBR score of 1000 (which would require 100% of the portfolio to be allocated to strategic philanthropy). But this does provide a simple guide to how the family has progressed towards its own vision of what it considers to be ‘socially responsible’ investing.
TOTAL BLENDED RETURN PORTFOLIO
The TBR Score aims to provide a simple profile of the Total Blended Return Portfolio which enables a family to visualize the impact that their decision to invest responsibly has had on the profile of their investment portfolio.
The TBR is calculated by combining the percentage of the portfolio invested with the Impact score of each of the categories.