RSF White Paper Released
September 8, 2011
A New Foundation for Portfolio Management is a paper that proposes new principles for creating an investment portfolio. Authored by Leslie Christian, of Portfolio 21 Investments with the support of Don Shaffer, President & CEO of RSF Social Finance, this paper challenges current assumptions about risk, growth and utility and proposes new principles to bring portfolio theory into the 21st century.
Through a process of inquiry, both RSF and Leslie Christian realized that the assumptions we were relying on to guide our investment strategy were no longer appropriate for the environment we are living in or for having the social impact we seek. It was this discovery that first led us to begin to rethink portfolio theory, and our investment strategy overall, and led to the creation of this paper.
The white paper provides a set of new foundational elements to build upon current investment including:
- Integrated Risk – a scientific view of risk that incorporates ecological limits and uncertainty, both usually ignored in investing.
- Selective Growth – growth can occur even if average economic growth is zero or negative, but it will be unique to particular sectors and companies rather than a function of rising per capita material consumption.
- Multidimensional Utility Function – investors need to have clarity with respect to the unique purpose and goals of each asset beyond solely financial.
It is our hope that this paper will inspire deeper discussion in the investment community. We look forward to continued conversations.