Building a balanced and scalable strategic asset allocation to meet financial and ESG impact goals 1

Increasingly, investors have both financial goals (e.g. return and risk targets) and ESG impact goals (e.g. positive social or environmental impact) for their portfolios and, in this chapter, we demonstrate how we would build a scalable strategic portfolio designed to achieve both. We systematically select assets that are aligned to the UN Sustainable Development Goals (SDGs) and apply Bridgewater’s All Weather portfolio construction process to engineer a balanced portfolio that we expect will achieve a higher ratio of return-to-risk over time than traditional asset allocations while also directing capital at scale toward entities aligned to the SDGs.²