Case Study

RS Group: Investing in the future we want to create through Total Portfolio Management


Most organisations hold more than one investment engagement and invest in multiple organisations. Portfolio management entails developing a diversified investment strategy with various investment vehicles that achieves the overall social and/or financial mission of the social investor. Some considerations for funders are what kind of organisations are added to the portfolio (pre-engagement), how to evaluate each organisations’ contribution (impact assessment), how can social and potentially business outcomes of the supported organisations be maximised (capacity building), and finally how they can exit organisational engagement at the end of the engagement period. Through these practices this area is linked to pre-engagement processes, informed by impact assessment and plays into multi-sector collaboration.

Depending on the investor’s priorities, this process and strategy appears to depend on outcome orientation such as the social mission, sector, investment type (grants, equity, debt or other). In this practice area, we aim to understand in what context and in what way by examining different investors.

This case study examines how RS Group’s approach involves “Investing through a value-based lens,” [1] so that the Group’s strategy and activities are always in alignment with its mission. The organisation has achieved a 100% sustainable mission-aligned portfolio [2] that generates both financial and impact returns.[3] The study focuses on the characteristics and evolution of the investment and grant components of the portfolio.

Organisational Portrait

RS Group is a Hong Kong-based family office that utilizes its assets to contribute to a more sustainable and equitable global community. To accomplish this objective, the group implements a ‘Blended Value Approach’ to total portfolio management, utilising a variety of investments, loans and grants to generate social, environmental and financial returns. The mission of the organisation is “To create a paradigm shift in societal values and priorities so that economic growth will support, instead of jeopardising, human development and environmental sustainability.”[4]

The founder and chair of RS Group, Annie Chen, started the organisation in 2008 with her personal financial assets. She ventured into impact investing after questioning the purpose of wealth and exploring ways in which her family wealth could contribute to society while also being managed in a fiscally responsible manner. Ms. Chen’s primary belief is that investments should grow in harmony with the values of an organisation.[5] Since 2008, the Group has progressed significantly by engaging in a learning journey and subsequently launching its first impact investment in 2010.

While RS group seeks to keep an open mind as it continues to explore new opportunities for impact generation, Ms. Chen’s overall vision has remained constant. The Group believes in moving beyond the traditional, strictly profit-driven portfolio management approach, instead making use of a Total Portfolio Management strategy that takes into consideration the blended environmental, social, and financial value components generated by any capital allocation, whether through the deployment of market-rate, concessionary or philanthropic capital. To expand on this, while there are investment holdings the RS Group investment committee (IC) chooses to screen out of its portfolio, the investment strategy operates with the same fiduciary and investment practices of any traditional portfolio and invests in a diverse set of asset classes, including listed equity, private equity, direct investments, fixed income, real assets, grants and cash.[6] The main difference between RS Group and traditional investors is that the RS Group IC selects opportunities that offer competitive financial returns together with the generation of measureable social and environmental impacts.

Blended Value Approach

RS Group’s main objective is to have a “100% sustainable mission-aligned portfolio.”[7] The Group uses a ‘Blended-Value Approach’, operating under the assumption there is no trade-off between financial return and social/environmental return, but rather simply that all capital has impact and investors should seek to manage that impact for the best integration of financial, social and environmental performance sought by the investor. Accordingly, RS Group projects the appropriate level of financial return for a specific capital strategy while also understanding the nature (both positive and negative) and extent of the social impact the strategy could potentially generate.[8] “Rather than being trapped within the “impact first” vs. “finance first” dichotomy, RS Group instead adopts the concept of “Blended Value” — the idea that positive outcomes can be optimized when the value created is being viewed through a holistic, integrated lens.”[9]

Portfolio Overview

Despite their different characteristics and paths of development, RS Group sees both investing and philanthropy as integral parts of an integrated approach to portfolio management.

The Group’s portfolio strategy operates within a broad perspective and is diversified between philanthropy, loans and investments in various impact areas.[10] Different investment instruments have been used to achieve the simultaneous goals of social and financial returns. RS Group’s portfolio is structured into three coordinated allocations:

  1. Sustainable and responsible Investing (SRI)
  2. Targeted Impact Investing (TI)
  3. Philanthropy

The impact strategy of the organisation is global. Grants were made in Greater China, Hong Kong, North America, Bhutan and other parts of Asia (as of June 2015). The Group’s portfolio includes investments that span North America, Latin America, Africa, the Middle East, Europe, Hong Kong and China.[11]

In constructing its portfolio, RS Group set a long-term time horizon of seven to ten years.[12] The Group began its foray into impact investments between June 2009 and Dec 2010 when it transferred 50% of its portfolio into Socially Responsible Investments over 18 months.[13]

Investment Portfolio Characteristics

The investment portfolio divestment from non-aligned assets to fully mission-aligned investments has been a process that progressed over a period of six years:

Source: RS Group Annual Impact Report, 2016, p. 29

RS Group[14] developed its investment portfolio in several steps:

  1. Setting the framework: Defining portfolio purpose, asset allocation, performance targets by asset classes, risk tolerance and liquidity requirements, all with consideration of the overall, Blended Value the principal sought to create through her portfolio.
  2. Devising a “Core and Satellite” approach: Core refers to lower risk, well diversified, cost efficient, transparent and liquid investment strategies (investments in listed equities and fixed income). Socially Responsible Investments (SRI) forms a large part of the core. Satellite refers to investments with higher risks and lower liquidity, mainly consisting of Targeted Impact Investments (TI)
  3. Migrating Liquid Assets to Core/SRI Strategies: Investment managers are chosen through a competitive bid process; preference was given to managers with long-term commitments to sustainable and impact investments.
  4. Migrating Illiquid Assets to Satellite/TI Strategies: The TI strategy was exploratory in nature and not as systematic as the implementation of SRI strategy had been. Opportunities were fragmented and time was spent on networking and other field building activities to stay updated with new deals and funds. Over time, a number of Targeted Impact (TI) _ fund vehicles, intermediaries and direct investments were identified locally and internationally. With legacy private equity commitments maturing, the freed funds were also moved into the TI Investment bracket.
  5. Formalising the focus on Climate Change mitigation: In 2013, a targeted focus on climate change mitigation was added to RS Group’s total portfolio policy statement. A concerted effort was made to divest from all investments that involved fossil fuels and reinvest into climate change solution strategies.

Characteristics[15] of the resulting portfolio:

  • Weighted toward listed and private equity/debt – to achieve long-term alignment of investor goals with manager incentives.
  • Actively managed strategies – to accomplish sustainability and impact goals and to contribute to a more ‘resilient and accountable financial system.’
  • Long-term view on emerging and frontier markets – to support sustainable development over time.
  • Overweight sector focus in industrials and technologies and underweight in energy – as a result of the divestment from fossil fuel, the energy sector is lightly represented; industrials and technology organisations on the other hand, are overweight as they tend to provide solutions to environmental and social challenges.
  • Weighted towards mid-cap growth companies – to comply with the impact-oriented mission of the Group’s investment philosophy.

Grant Portfolio Characteristics

RS Group’s Grant Portfolio[16] strategy has evolved through the years in the same manner as its market-rate investment approach. Initially, RS Group worked on investing its philanthropic capital “organically and opportunistically.” This entailed providing grants to such diverse projects as enhancing farmers’ access to land rights via supporting Landesa’s work, to supporting the UN World Food Program in transitioning its school feeding program to the government of Bhutan. It also included supporting specific programs at Ms. Chen’s alma maters: Brown University’s Social Innovation Initiative, and Columbia Law School’s Greater China Public Interest Fellowship. Closer to home, the Group also began to support the development of social enterprises in Hong Kong through the sponsorship of intermediaries such as Social Ventures Hong Kong, research projects, and public events.

As it continued to develop its grant portfolio, RS Group adopted a more integrative approach towards grant giving in line with their Total Portfolio Management Approach. As the portfolio matured, the Group’s focus shifted toward the promotion of sustainability – both social and environmental. Today, the Group maintains a thematic approach to its philanthropy and leverages several strategic partnerships. For example, to develop the organisation’s expertise in environmental sustainability, the group has partnered with ADM Capital Foundation (ADMCF), a foundation dedicated to sustainable environmental conservation. This has helped the Group to better understand and support numerous environmental initiatives such as China Water Risk and the Clean Air Network.

RS Group supports its grantees to do work of the following nature:

  • Organisational development/capacity building
  • Programmatic development and implementation
  • Field-building
  • Advocacy

While RS Group remains flexible, it endeavours to have one to three of the above criteria covered in each grant. Overall, it currently maintains 19 philanthropic engagements. Within these, field-building is a focus in 11 engagements. Organisational development/capacity building, programmatic development and advocacy are represented 9 times each.

Thematically, better livelihoods for underserved communities is covered by 43.7% of the philanthropy portfolio; rule of law and public interest law promotion is covered by 27.1%; human and environmental well-being is covered by 12.6%; and 11.3% of the portfolio focuses on strengthening the social fabric. Two smaller areas within the portfolio are infrastructure for sustainable and impact investing, which is covered by 4.4% and climate change mitigation and resource efficiency, which is covered by 0.9%.[17]

Project Selection in the Pre-engagement Phase

The Investment Portfolio is managed similarly to other portfolio. Decisions are made after assessing which assets should be included, which geographies will be covered and how much risk may be taken. In the Grant Portfolio, grants are added on in alignment with the impact lens strategy.

In terms of geographic distribution, the Investment Portfolio focuses mainly on funds domiciled in North America. This is largely due to the expertise of the Group’s advisors and an inability to always find the right funds in Asia. The Group considers many funds that are located outside of Asia, but invest in Asia. ResponsAbility and Oasis Fund[18]  are but two such examples.  With regard to the Grant Portfolio, RS Group prioritises Asian SPOs as well as INGOs which have a presence in Asia, as this allows RS Group to build a local eco-system.[19]

Geographically, the total portfolio is distributed globally:

Source: RS Group Annual Impact Report, 2016, p. 16

Capacity Building

RS Group also provides financial assistance to organisations for organizational capacity building.[20] For the grantees, this may include funding items such as overhead expenses as well as and development of new programmes. RS Group also seeks to facilitate introductions to others for learning about best-practice and exchanging perspectives based upon diverse experiences.[21]

In its capacity building practice, RS Group considers four key aspects of an organization’s work for support:[22]

  1. Capacity Building
  2. Program Development and Implementation
  3. Field Building
  4. Advocacy

Impact Assessment

As it allocates its capital with a Total Portfolio perspective, RS Group also seeks to measure performance across its portfolio in a holistic manner. However, in this endeavor it has faced certain challenges, including:

  1. Strategy shifts over time that affect its ability to develop a unified performance metric framework from the outset;
  2. Varied stages of organizational development of investees and grantees; and
  3. Lack of a universal measurement system.

As a result, RS group measures each of its asset class using different parameters. Standardized metrics may be available within certain asset classes (e.g. measurement of ESG standards and carbon footprint in public equity and debt funds and IRIS metrics for impact investments), while customized metrics might be required where no standard indicators exist (e.g. philanthropy).

In keeping with its blended-value approach, and bearing in mind distinctions between deployment of Market-Rate and Philanthropic capital, RS group assesses portfolio impact on three levels:

  • Individually under the Investment Portfolio
  • Individually under the Grant Portfolio in the areas of grant giving (Capacity Building, Program Development and Implementation, Field Building and Advocacy)
  • As a blended-value approach and collectively as a Total Portfolio

The Investment Portfolio may be assessed according to its financial performance and its impact performance.

With regard to managing for financial performance, RS Group has developed a custom benchmark based on the MSCI ACWI Barclays Global Aggregate and other customised approaches such as the cash legacy PE (fund of funds), early stage PE and real assets.[23] The 5.5 yr. average annual portfolio return was 5.0%, compared to 5.2% of the portfolio weighted benchmark.

RS Group used Sustainalytics to measure the ESG scores and carbon footprint of its underlying listed equity investments, and B Lab to aggregate 7 IRIS performance indicators among its private equity and debt funds. At the same time, the investment portfolio was allocated to four impact areas: 33% to climate change mitigation and resource efficiency, 24% to cover better livelihoods for underserved communities, 21% to human and environmental well-being, 16% to cover sustainable food and agriculture and the remaining 6% to infrastructure for impact investing. Due to the rigorous engagement process before the investment, the alignment is strong enough to ensure impact. Only very rarely have sub-par impact performance led to an investment exit.

These themes are aligned with the Grant Portfolio strategy and complement as well as amplify the impact produced by the philanthropy portfolio. Furthermore, the philanthropy portfolio tackled issues such as ‘strengthening the social fabric’ (11.3%) and ‘rule of law and public interest law promotion’ (27.1%).

The Grant Portfolio is evaluated on a project-by-project basis and its performance is represented by stories as much as figures. The stories include recounting of lives touched and improved upon as well as assets mobilised. Social Ventures Hong Kong is a case in point.[24] Moreover, each of the projects in this portfolio focuses on organisational development/capacity building, programmatic development, field-building and advocacy and the potential impact to be derived from each of them.[25]

The Total Portfolio approach ensures coordination of the different elements of the portfolio and also guarantees that the individual parts generate the desired overall impact. The Total Portfolio management strategy can be conceptualised as a value-based lens.


Source: RS Group Impact Report, 2016, p. 25

Taking an integrated approach in combating Climate Change

A good example of how RS Group applied this value-based lens is in the development of its climate change strategy, which is applied on both the investment and philanthropy sides of the portfolio.

Having developed its Fossil Fuel Policy in 2013 and as a signatory of the “Divest-Invest”[26] pledge since 2015, RS Group are naturally aware of the risks posed by fossil fuel investments. However, RS Group are by no means purists on this matter, instead taking a flexible approach with a focus on engagement. A number of RS Group’s managers naturally stay out of the oil/commodity industry due to their sustainability screens, while others undertake active engagement and/or strict ESG/controversy screens in the selection process. In the most recent review fossil fuel related holdings, RS Group’s key exposure is approx. 1% of its portfolio. RS Group had no exposure to the coal sector and within the 1% exposure, ~40% was in the oil extraction and production sector while the remaining was spread across gas and downstream/service industries.

Furthermore, RS Group have undertaken targeted capital allocation to philanthropy initiatives such as Clean Air Network and China Water Risk (via ADM Capital Foundation). RS Group  also continue to stay active on  research and advocacy efforts around the divestment movement and environmental issues opportunistically, supporting research by Carbon Tracker, and sharing experience in reports such as the 2016 “Divest Invest Philanthropy Guide” by the Australian Environmental Grantmakers’ Network.

As Joan Shang from RS Group summarises[27]: “Overall, we believe RS Group’s portfolio is still in-line with our fossil fuel policy stance, both from a total exposure and active engagement point of view. We will continue to seek ways to optimize our portfolio around this strategy.”

Source: Internal Analysis, RS Group, 2016

Rebalancing and Redemption Process

The Investment Portfolio is reviewed annually for alignment with impact and financial performance objectives. Financial performance is the first priority for investments, quickly followed by impact performance. To this end, redemptions may be made to rebalance allocations and manage portfolio risk. In 2013, RS Group divested from fossil fuel in order to align more closely with its sustainability mission.[28]

When it comes to philanthropy, RS Group views itself as a strategic funder that seeks to assist organisations in becoming more sustainable. Demonstrating the success of this strategy, many organisations have reported that RS Group’s support has been invaluable in giving them the ability to develop their strategy and explore opportunities for growth.[29]  However, at the same time RS Group is also a catalytic funder. Once the Group believes a grant has progressed past the stage where RS Group is best equipped to support, and attracted other funders, it is also happy to “graduate” the grant to other supporters and partners.

Multisector Collaboration

RS Group actively collaborates with multiple stakeholders, engaging in a number of coordinated funder opportunities.  For years, they have worked with ADM Capital Foundation in funding initiatives in water scarcity, clean air and other environmental issues. The benefits to this partnership are that RS Group can leverage ADMCF’s expertise on environmental issues in Hong Kong and elsewhere. RS Group’s advocacy also aims to widen the options in impact investing in order to organise co-investments. Partnerships with High-Net-Worth-Individuals (HNWIs) are especially useful as they are more collaborative in investing in funds.

Development and Dissemination of Knowledge

RS Group continues to evolve and develop strategies important to impactful investing. Some key takeaways gleaned from past experience include:

  • Navigating your journey amidst strategic ambiguity
    While a total portfolio management theory and practice is useful, adopting a values- based approach allows for building an integrated portfolio from existing opportunities.
  • Investing with intentionality and creating investment opportunities
    Established tools and practises are often absent from impact investment, so impact investing requires the development of strategies and alliances that are not always readily apparent.
  • Identifying value creation through a ‘blended’ lens
    Cross-cutting themes allow for leveraging different parts of the portfolio for a maximised result.
  • Investing in ecosystems
    A market infrastructure of funds, strategies and practice that exists for traditional investors does not necessarily exist for impact investors, so this infrastructure must be built through investment.
  • Importance of unrestricted funding
    Investing in more than a specific performance and capital owners must be willing to allocate unrestricted funding to enable the support newer organizations and infrastructure.
  • Being creative around resource limitations
    Investors may have more interest than bandwidth to invest in all of their interests. Being creative in leveraging across themes and partnering is a necessity.
  • Managing a ‘blended’ team of talents
    Having a team that brings a diverse, cross-disciplinary perspective to strategy and execution and ‘talking across silos’ has been key to RS Group’s investment and grant relationships.
  • Having the right perspective and celebrating the journey!
    Recognising that the journey is a marathon and not a sprint and enjoying it along the way is equally critical as all the above learnings

In summary

RS Group’s investment approach exemplifies how a strong and curious investor may manage assets for simultaneous pursuit of financial returns with the generation of greater good of a society. The Group’s evolution from its conception in 2008 until today has taken it far in the application of the Blended Value approach that makes use of both market rate and philanthropic capital to create the total performance it seeks. Moreover, in terms of impact assessment, RS Group has pioneered a way to ensure alignment with investment managers as well as leveraging across investments and grants to achieve outcomes in line with its vision of a balance between financial, social and environmental gains.


For a full copy of the detailed Impact Report of RS Group, please visit: http://report.rsgroup.asia

For more information on RS Group, including biographies of its founder and team, please visit the company website: http://www.rsgroup.asia/

[1] http://www.rsgroup.asia/approach/

[2] Annual Report 2016, p.29

[3] http://www.barrons.com/articles/impact-investor-sees-values-as-biggest-asset-1470793472 accessed o 10 Oct 2016

[4] http://www.rsgroup.asia/about/

[5] http://www.barrons.com/articles/impact-investor-sees-values-as-biggest-asset-1470793472 accessed on 10 Oct 2016

[6] Annual Report 2016, p 32

[7] Annual Report 2016, p. 29

[8] Annual Report 2016, p. 25

[9] Annual Report 2016, p. 25

[10] Annual Report 2016, p 27

[11] Annual Report 2016, pp. 16 – 17

[12] http://www.alliancemagazine.org/opinion/stewarding-wealth-for-the-common-good-how-an-asian-family-office-incorporated-climate-change-mitigation-into-its-portfolio/ accessed on 10 Oct 2016

[13] Annual Report 2016, p.19

[14] Annual Report 2016, p 30

[15] Annual Report 2016, p. 36

[16] Annual Report 2016, p. 37

[17] Annual Report, 2016, pp. 42-43

[18] Conversation with Joan Shang, Senior Associate, RS Group, 7 October 2016; Annual Report, 2016, p. 33

[19] Conversation with Joan Shang, Senior Associate, RS Group, 7 October 2016

[20] Annual Report, 2016, p 39

[21] Conversation with Joan Shang, Senior Associate, RS Group, 7 October 2016

[22] Annual Report, 2016

[23] Annual Report 2016, p. 48

[24] Annual Report, 2016, p. 57

[25] Annual Report, 2016, pp. 60-61

[26] A global grassroots movement to mobilize private and public capital to speed the global energy transition away from carbon intensive fossil fuels (http://divestinvest.org/)

[27] Email conversation with Joan Shang, Senior Associate, RS Group, 15 March 2017

[28] Annual Report, 2016, p. 20

[29] Conversation with Joan Shang, Senior Associate, RS Group,  7 October 2016




A. Environmental Stewardship
To protect the environment, we organize programmes like mangrove nursery and Reforestation, Coastal and River Clean-Up, Community Based Environmental Solid Waste Management, Environmental IEC Campaign and Eco-Academy

B. Food Security and Sustainable Livelihood
To ensure a sustainable livelihood for the community, eco-tourism include Buhatan River Cruise Visitor Center Buhatan River Mangrove Boardwalk are run by the community. Others include Organic Vegetable and Root crops Farming, Vegetable and Root crops Chips and by-products Processing and establishing a Zero waste store.

C. Empowered Communities
To empower the community, we provide product and Agri-Enterprise Development Training, Immersion and Learnings Exchange Program, Earth Warrior Training and Community Based Social Entrepreneurship Training

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