Strong performance

Although returns are not your only criterion, let's look at the reality behind three widespread myths about SRI.

Source: Ethical Funds (Canada)

Myth no. 1: “Socially responsible investing is just a passing fad. It’s of no interest to me.”

RÉALITÉ : L’ISR se classe parmi les catégories de placement à plus forte croissance dans le monde.

  • SRI is among the most strongly growing investments categories worldwide.
  • In Canada, the portion of total assets invested in SRI in 2010 was estimated at 19.1%.
  • By 2009, the European SRI market had risen to €2.7 trillion.

Myth no. 2: SRI funds are limited in their investments.

RÉALITÉ : Seulement 4 % de la capitalisation de la Bourse de Toronto est automatiquement exclue de l'univers de placement des Fonds Éthiques.

  • Only 4% of the Toronto Stock Exchange capitalization is automatically excluded from the investments in the Ethical Funds universe.
  • All portfolio managers rely on certain factors to demarcate their investment universe – for example style (value or growth), market capitalization, sector of activity, or region. In the case of SRI, the specific factors analyzed are environmental, social and governance aspects.
  • Of the 258 companies on the TSX index, 44 were deemed to present a high risk after financial and ESG analysis, and were thus dropped from Ethical Funds portfolios in September 2011. They represent no more than 17% of the Toronto Stock Exchange capitalization.
  • Among the 44 excluded companies, only 11 were ruled out automatically by reason of their operations (no Ethical Funds portfolio invests in nuclear energy, tobacco or armaments). The 33 remaining companies did not meet the minimum ESG criteria for companies in their sector.

Myth no. 3: Returns are weak.

RÉALITÉ : Les rendements sont au rendez-vous : l'indice social Jantzi montrait un meilleur rendement mensuel que le S&P/TSX Composé et le S&P/TSX, et un rendement annualisé depuis son introduction en 2000 de 6,45 %, par rapport à 6,69 et à 6,37 % pour le S&P/TSX Composé et le S&P/TSX, respectivement.

  • Returns are strong: the Jantzi social index showed better monthly performance than the S&P/TSX Composite and the S&P/TSX, and an annualized return since its introduction in 2000 of 6.45%, in comparison with 6.69 and 6.37% for the S&P/TSX Composite and the S&P/TSX respectively.
  • As of March 31, 2012, for Canadian stocks, annualized returns of SRI investments were superior to those of the benchmark asset class over three years, with SRI investments showing returns of 12.38% compared with 12.48% for Canadian stocks in general, according to data compiled by the RIA.
  • Staying with Canadian stocks, annualized returns over five years (-0.49% for SRI as against -1.03% for Canadian stocks in general) and over 10 years (5.73% pour SRI, as against 4.37%) demonstrate that these are attractive investments.

building your SRI portfolio

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