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MorganStanleyGlobal Impact FundingTrust (GIFT): Impact Pools
CRC1126157 (3/2015)
Expiration (3/2016)
Global Impact Funding Trust (GIFT) Introduction
The Morgan Stanley Global Impact Funding Trust (GIFT) is a donor-advised fund and suite of
associated philanthropic services.
Contributions to GIFT are invested in Consulting Group's Select UMA program, a unified
managed account platform that combines separately managed accounts, mutual funds
and exchange-traded funds in a diversified, cost-effective portfolio. There are currently six
programs (pools) available including two pools that aim to generate market-rate financial
returns while demonstrating positive environmental and/or social impact that are the focus
of this presentation.
KEY GIFT FEATURES:
Asset allocation
strategies developed
by the Morgan Stanley
Wealth Management
Global Investment
Committee
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Disciplined portfolio
construction provided
by Consulting Group
across six pools –
including two Impact
pools
Investment products
in Select UMA
researched by
Consulting Group’s
Global Investment
Manager Analysis
Professionally managed
investment strategies
featuring broad
diversification and
automatic rebalancing
What Is Investing with Impact?
Morgan Stanley defines Investing with Impact as an approach that aims to generate marketrate financial returns while demonstrating positive environmental and/or social impact.
Financial Goals
Financial performance
driven by economic
fundamentals
Investing
with
Impact
Impact Goals
Positive social and/or
environmental outcomes
driven by values and mission
“Delivering innovative solutions for our clients that align their personal values with their
financial goals is an important focus for Morgan Stanley, and I believe we are uniquely suited
to do this.”
—James Gorman
Morgan Stanley Chairman and CEO
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INVESTING WITH IMPACT
Evolving Approach to Investing with Impact
SOCIALLY RESPONSIBLE INVESTING & VALUES ALIGNMENT
1970s on…
Investing
with
Impact
ESG INTEGRATION
1990s on…
IMPACT INVESTING
2000s on…
Investing with Impact
incorporates a variety of terms and
investment approaches that have
evolved significantly in the past few
years. US-based assets
incorporating these approaches
have increased 76% in the last two
years alone.
Sustainable, Responsible and Impact Investing in US 1995-20141
$ billions
7000
ESG Incorporation
6000
Total
5000
4000
3000
2000
1000
0
1995
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1997
1999
2001
2003
1 Report on the Sustainable and Responsible Investing Trends
2005
2007
2010
2012
2014
in the United States, 2014. US SIF Foundation, 2014
Investment Performance
Cumulative Return (%)
The MSCI KLD 400 Index invests in companies that meet best-in-class environmental, social
and governance (ESG) criteria and have delivered favorable performance with comparable
risk relative to the S&P 500 Index.
MSCI KLD 400 Social Index
S&P 500 Index
Annualized Return (%)
MSCI KLD 400
Social Index
10.14
S&P 500 Index
9.69
Cumulative Excess Return
vs. S&P 500 Index
Assets in sustainable and responsible investments now total $6.57 trillion, or nearly 1 in
every 6 dollars in the U.S.*
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Sources: Zephyr Analytics and “Report on the Sustainable and Responsible Investing Trends in the United States,” 2014. US SIF Foundation,
2014. *This number excludes separately managed accounts.
Note: Past performance is not a guarantee of comparable future results. The index returns are illustrative and shown for comparative purposes
only. They do not represent the performance of any specific investments. An investor cannot invest directly in an index.
Investment Process is Systematic and Risk-aware
The Investing with Impact Portfolios on the Select UMA® platform are constructed with the
same risk-aware process leveraged for all firm-discretionary portfolios.
• Identify active risks in the portfolio
• Market analysis and model portfolio
allocation guidance based on the
Morgan Stanley Wealth Management
Global Investment Committee
• Seek to allocate risk efficiently
• Analyze variations in risk, managers and
their strategies
• Utilize multi-factor analysis to
determine optimal weightings
• Emphasize high-conviction,
complementary independent, thirdparty managers
• Dedicated portfolio construction team of
20 professionals
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Risk
Management
Asset
Allocation
Portfolio
Construction
Manager
Analysis
• Establish strategic framework
• Opportunistically over- and
underweight asset classes
•
Due diligence conducted across
separately managed accounts, mutual
funds, ETFs and alternative strategies
•
Dedicated third-party manager
assessments with opinion-based
manager analysis
•
Evaluate managers’ approach using
the Investing with Impact Framework
Managers Undergo Extensive Analysis Prior to Inclusion
Morgan Stanley leverages multiple professional teams to determine the third-party asset
managers and investment products appropriate for inclusion.
MANAGER UNIVERSE
‘BEST FIT’ MANAGERS DETERMINED BY
PORTFOLIO ADVISORY SERVICES*
Morgan Stanley’s Global Investment Manager Analysis team leverages
quantitative, qualitative and operational due diligence conducted by 30
dedicated analysts on more than 1,300 products, including separately
managed accounts, mutual funds and ETFs that are available on our
advisory platform.
Identify managers with a clear approach to Investing with Impact
Filter for
Asset Class and
Investment Style
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QUANTITATIVE FILTER
QUALITATIVE TEST
• Peer analysis
• Rolling period returnsbased style analysis
• Modern Portfolio Theory
statistics
• Holdings-based
attribution
• Risk-based analysis
•
•
•
•
•
•
INVESTING WITH IMPACT
Firm/People
Organizational structure
Competitive advantage
Investment philosophy
Process and strategy
Performance expectations
Working List
Presents
tactical
opportunity
Exhibits
consistent
process and
contribution
to overall
portfolio risk
Complements
other
holdings
Expresses
thematic
view
*Portfolio Advisory Services (PAS) is the Investing with
Impact strategies’ portfolio manager
Investing with Impact Framework
Morgan Stanley’s Investing with Impact Framework enables clients to align investment decisions with impact
priorities across their portfolio.
Minimize Objectionable Impact
INVESTMENT
EXAMPLES
IMPACT INVESTMENT
CHARACTERISTICS
DEFINITION
VALUES ALIGNMENT
Targeted Impact
ENVIRONMENT, SOCIAL AND
GOVERNANCE (ESG) INTEGRATION
IMPACT INVESTING
• Managing exposures by
intentionally avoiding
investments based on
specific criteria
• Proactively considering ESG
criteria alongside financial
analysis to identify
opportunities and risks
during investment process
• Focusing on themes and
sectors dedicated to solving
sustainability-related
domestic and global
challenges
• Allocating to investment
funds focused on private
enterprises structured to
deliver specific positive
social and/or environmental
impacts
• Public equity, Public fixed
income, alternatives
• Public equity and public
fixed income
• Public equity and public
fixed income
• Differentiated by restriction
criteria and degree of
shareholder advocacy
• Differentiated by ESG
integration process and
degree of shareholder
advocacy
• Differentiated by macroanalysis, sustainability
research and sector focus
• Differentiated by impact
approach, regional focus,
liquidity and impact reporting
• Not proactively seeking
environmental and social
impact
• Mutual fund that excludes
companies from buy universe
(e.g. tobacco, firearms, coal
mining companies)
INVESTING WITH IMPACT
• May have investor restrictions
• May also include screens
• Separately Managed Account
(SMA) incorporating analysis
of ESG performance into
stock selection process
PUBLIC MARKETS
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SECTOR EXPOSURE
• Exchange-traded fund (ETF)
tracking index of renewable
energy companies
• A private equity fund focused
on emerging consumers or
project level renewable
energy investment.
PRIVATE MARKETS
GIFT: Impact Pools Portfolio Construction
No Direct
Mission
Alignment
Values-Alignment
Exclude companies and/or sectors that are in opposition
to values. For example: tobacco, alcohol, weapons.
Values
Alignment
ESG-Integrated
Examples of Environmental, Social and Governance criteria
include the corporate carbon footprint, employee health
and safety, workforce diversity policies, business ethics.
ESGIntegration
Sector Exposure
Invest in themes and sectors creating solutions to targeted
ESG issues. For example: resource scarcity, community
development including affordable housing.
Sector
Exposure
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GIFT: Impact Pools
Overview. The Investing with Impact Pools in the GIFT donor advised fund employ highly regarded third-party investment
managers with demonstrated experience in generating positive environmental and social impact to construct welldiversified portfolios across the continuum of Investing with Impact approaches. Eligible investments include separately
managed accounts, mutual funds and exchange-traded funds (ETFs).
INVESTING WITH IMPACT POOL - EQUITY1
INVESTING WITH IMPACT POOL – BALANCED2
Account Minimum: $25,000
Account Minimum: $25,000
Developed
Int’l Equity,
30%
US Multi
Cap Growth
Equity, 21%
US Multi
Cap Core
Equity, 21%
US Small /
Mid Value
Equity, 9%
US Large
Cap Value,
19%
The above allocations are as of March 1, 2015 and are subject to change.
1 Inception date: February 6, 2015
2 Inception date: January 30, 2015
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US Core Fixed
Income, 23%
US Multi Cap
Growth Equity,
12%
US Multi Cap
Core Equity, 12%
US Short-Term
Fixed Income,
20%
Developed
International
Equity, 17%
US Large Cap
Value, 11%
US Small / Mid
Value Equity, 5%
GIFT: Investing with Impact Pool - Equity
Manager Name
Strategy
Asset Class
Allocation (%)
Investing with Impact Focus
ClearBridge Investments
ClearBridge Multi-Cap Growth ESG
SMA
US Multi Cap Growth Equity
12.0
ESG-Integrated, Shareholder
Engagement
Riverbridge Partners
Riverbridge ECO Leaders SMA
US Multi Cap Growth Equity
9.0
ESG-Integrated
Neuberger Berman
NB Socially Responsible Investing
Mutual Fund (NBSLX)
US Multi Cap Core Equity
10.5
ESG-Integrated, Shareholder
Engagement
Blackrock
iShares KLD 400 Social ETF
US Multi Cap Core Equity
10.5
ESG-Integrated, Shareholder
Engagement
ClearBridge Investments
Clearbridge Socially Aware Large
Value SMA
US Large Cap Value
19.0
ESG-Integrated, Shareholder
Engagement
Ariel Appreciation Mutual Fund
(CAAPX)
US Small / Mid Value Equity
9.0
Values Alignment
16.0
ESG-Integrated, Shareholder
Engagement
Developed International Equity
14.0
Values Alignment, Shareholder
Engagement
TOTAL GLOBAL EQUITIES
100.0
Ariel Investments
ClearBridge Investments
Calvert Investments
Clearbridge International Growth
ADR ESG
Calvert International Equity Mutual
Fund (CWVGX)
Developed International Equity
Notes:
As of February 6, 2015.
SMA = Separately Managed Account | ETF = Exchange-Traded Fund
The sample portfolio is provided for informational purposes only and should not be deemed to be a recommendation to purchase or sell the securities mentioned. There is no guarantee
that any securities mentioned will be held in a client account. It should not be assumed that the securities transactions or holdings discussed were or will be profitable. Information
subject to change at any time without notice.
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GIFT: Investing with Impact Pool - Balanced
Manager Name
Strategy
Asset Class
Allocation (%)
Investing with Impact Focus
ClearBridge Investments
ClearBridge Multi-Cap Growth ESG
SMA
US Multi Cap Growth Equity
7.0
ESG-Integrated, Shareholder
Engagement
Riverbridge Partners
Riverbridge ECO Leaders SMA
US Multi Cap Growth Equity
5.0
ESG-Integrated
Neuberger Berman
NB Socially Responsible Investing
Mutual Fund (NBSLX)
US Multi Cap Core Equity
6.0
ESG-Integrated, Shareholder
Engagement
Blackrock
iShares KLD 400 Social ETF
US Multi Cap Core Equity
6.0
ESG-Integrated, Shareholder
Engagement
ClearBridge Investments
Clearbridge Socially Aware Large
Value SMA
US Large Cap Value
11.0
ESG-Integrated, Shareholder
Engagement
Ariel Appreciation Mutual Fund
(CAAPX)
US Small / Mid Value Equity
5.0
Values Alignment
9.0
ESG-Integrated, Shareholder
Engagement
Ariel Investments
ClearBridge Investments
Clearbridge International Growth
ADR ESG SMA
Developed International Equity
Calvert Investments
Calvert International Equity Mutual
Fund (CWVGX)
Developed International Equity
8.0
Values Alignment, Shareholder
Engagement
Vanguard
Vanguard Short Term Bond ETF
(BSV)
US Short-Term Fixed Income
20.0
--
Community Capital
CRA Qualified Investment Mutual
Fund (CRANX)
US Core Fixed Income
23.0
ESG-Integrated, Sector Exposure
TOTAL GLOBAL EQUITIES
57.0
Notes:
As of January 30, 2015.
TOTAL GLOBAL FIXED INCOME
43.0
SMA = Separately Managed Account | ETF = Exchange-Traded Fund
The sample portfolio is provided for informational purposes only and should not be deemed to be a recommendation to purchase or sell the securities mentioned. There is no guarantee
that any securities mentioned will be held in a client account. It should not be assumed that the securities transactions or holdings discussed were or will be profitable. Information
subject to change at any time without notice.
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Disclosures
Although the statements of fact and data in this presentation have been obtained from, and are based upon, sources that Morgan Stanley believes to be reliable, we do
not guarantee their accuracy, and any such information may be incomplete or condensed. All opinions are as of the date of this presentation and are subject to change
without notice.
This presentation is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. This material does
not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it.
The securities discussed in this material may not be suitable for all investors. Morgan Stanley recommends that investors independently evaluate particular investments
and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an investor’s
individual circumstances and objectives. Past performance is not a guarantee of future results. Diversification and asset allocation do not ensure a profit or protect against
a loss.
Investing in the markets entails the risk of market volatility. The value of all types of securities, including mutual funds and exchange-traded funds (ETFs), may increase or
decrease over varying time periods.
An investment in an exchange-traded fund involves risks similar to those of investing in a broadly based portfolio of equity securities traded on exchange in the relevant
securities market, such as market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in stock
prices. The investment return and principal value of ETF investments will fluctuate, so that an investor's ETF shares, if or when sold, may be worth more or less than the
original cost.
To the extent the investments depicted herein represent international securities; you should be aware that there may be additional risks associated with international
investing, including foreign economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes, and differences in financial and
accounting standards. These risks may be magnified in emerging markets. International investing may not be suitable for everyone.
Equity securities’ prices may fluctuate in response to specific situations for each company, industry, market conditions and general economic environment. Companies
paying dividends can reduce or cut payouts at any time.
Fixed income securities are subject to interest rate risk, credit risk, prepayment risk, market risk, and reinvestment risk. Fixed income securities, if held to maturity, may
provide a fixed rate of return and a fixed principal value. Fixed income securities prices fluctuate and if sold prior to maturity, may be worth more or less than their original
cost.
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Disclosures (continued)
In Consulting Group’s advisory programs, alternative investments are limited to US-registered mutual funds, separate account strategies and exchange-traded funds
(ETFs) that seek to pursue alternative investment strategies or returns utilizing publicly traded securities. Investment products in this category may employ various
investment strategies and techniques for both hedging and more speculative purposes such as short-selling, leverage, derivatives and options, which can increase volatility
and the risk of investment loss. Alternative investments are not suitable for all investors.
Investors should carefully consider the investment objectives, risks and charges and expenses of a mutual fund or exchange-traded fund before investing. The
prospectus contains this and other information about the mutual fund or exchange-traded fund. To obtain a prospectus, contact your Financial Advisor or Private
Wealth Advisor. Please read the prospectus carefully before investing.
INDEX DEFINITIONS
S&P 500 Index – Regarded as the best single gauge of the US equities market, this capitalization-weighted index includes a representative sample of 500 leading
companies in leading industries of the US economy.
MSCI KLD 400 Social Index – The MSCI KLD 400 Social Index is a market capitalization-weighted Common Stock Index, consisting of 400 corporations that have passed
multiple, broad-based social screens. The index is maintained by Kinder, Lydenberg, Domini & Co., Inc. and is intended to serve as a proxy and benchmark for the universe
of stocks from which social investors might choose. The index was set at a value of 100 as of May 1, 1990. Since its inception, fewer than one change per month has been
made in the index, primarily due to takeovers and acquisitions.
Morgan Stanley GIFT, Inc. is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, and Morgan Stanley Global Impact Fund
Trust is a donor advised fund. Various divisions of Morgan Stanley Smith Barney LLC (the Firm) provide investment management and administrative services to Morgan
Stanley GIFT.
For more information about GIFT, please contact your Morgan Stanley Financial Advisor or Private Wealth Advisor.
© 2015Morgan Stanley Smith Barney LLC. Member SIPC. Consulting Group is a business of Morgan Stanley Smith Barney LLC.
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