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Investing for eternity

Beliefs and values are informing economic choices 'at a level we've never seen before in Canada,' Marlene Habib writes

Special to The Globe and Mail

Even at RRSP crunch time, being loyal to your faith is a greater god than money for Canadians like Rehan Saeed.

Mr. Saeed, a mortgage lender who lives in Mississauga just west of Toronto, recently moved all his registered retirement savings plan investments to frontierAlt Capital Corp., a financial services company offering mutual funds that have been screened to ensure they comply with Islamic law, known as sharia.

"I want to retire earlier than normal. That is definitely a goal, and why I'm working so hard now - to spend more time with our family," says Mr. Saeed, a 28-year-old originally from Karachi, Pakistan.

The newlywed's 22-year-old wife, Abeer, is not working outside their home. But even living on a single income doesn't sway the couple from adhering to Islamic finance principles, which include the prohibition of fixed charging of interest.

It's mandatory, for example, that his RRSP assets, now in the five figures, are "not collecting interest on purpose," Mr. Saeed says.

"I see no need to do that when there's an alternative out there that is socially responsible and a company that has taken the initiative to be sharia-compliant."

Faith-based RRSP investing isn't limited to the Muslim community, of course, and can include, but is not limited to, socially responsible investing (SRI). SRI principles focus on staying away from companies involved in industries such as tobacco or alcohol production, nuclear power, military or weapons-related contracting, gambling and pornography.

Rick Harper is a vice-president with Advisors With Purpose, a network of Christian financial professionals who emphasize charitable giving and SRI with their clients. Sponsored by the Ottawa-based Canadian National Christian Foundation, Advisors With Purpose certifies financial advisers as Christian financial counsellors (CFCs).

"We believe that the Bible contains the greatest wisdom in financial matters of any book in history," Mr. Harper explains. "Clients of Christian financial advisers should see integrity in their lives, and a genuine and caring concern for them as a whole person of value in God's eyes. We believe that as Christians, we should care not only about how much money we make and keep for ourselves, but how we make it."

"When it comes to investing, that may mean passing on buying into something that is environmentally or morally unsustainable such as a heavy pollution industry, or it might mean pressuring the companies you are involved with to pay their workers in other countries a living wage," Mr. Harper says.

Brian Evans, a CFC with Evans Financial Services in Uxbridge, Ont., says many Christian faith-adhering, RRSP-eligible mutual funds might not look any different from other funds.

"They invest in the same form of equities, bonds, mortgages, et cetera, as do any of the funds," he says.

"After management determines the value of the stock based on all the main factors, they then subject the investments to an additional filter ... for ethics, integrity and faith issues. In many ways, these funds will look, act and respond economically similar to their counterparts."

Mr. Harper says mutual funds most closely aligned with Christian principles are SRI-related. "Many of the big players such as RBC, TD and Mackenzie [Financial Corp.] all have an SRI option available, and there are some firms that specialize in this area, such as Acuity [Funds Ltd.], Ethical [Funds Inc.] and Meritas [Financial Inc.]."

Cambridge, Ont.-based Meritas, which is owned by the Mennonite Savings and Credit Union, saw its total assets grow by more than 90 per cent last year across Canada, says CEO Gary Hawton.

"We are finding more investors coming to the realization that it is not just about how much money you make, but also about how you make that money," Mr. Hawton says.

Michael Jantzi is president of Toronto-based Jantzi Research, an independent investment research firm formed in 1992 that tracks environmental, social and governance risk of global securities - information used by institutions that manage money.

He says investors' values are informing their economic choices "at a level we've never seen before in Canada.

"The way they spend and invest their money should reflect the values of their faiths, while providing them with financial security over time. And these funds [tend to] perform competitively, so people are saying, 'If it's a matter of having my cake and eating it too, why can't I do that?' "

Jantzi Research features on its Jantzi Social Index (launched in 2000 with partners Dow Jones Indexes and Montreal-based State Street Global Advisors) some 60 companies that meet various environmental, social and governance rating criteria. The companies include Alcan Inc., BCE Inc., Canadian National Railway and EnCana Corp., MDS Inc. and Research in Motion.

Many of these companies are also among frontierAlt's offerings of Oasis Funds, a new group of sharia-compliant mutual funds created to meet the investment needs of the Muslim community. Oasis Funds will offer competitive returns to Muslims without compromising sharia principles, says Asif Khan, frontierAlt's chairman and CEO.

Oasis Funds provides long-term capital appreciation and income through a portfolio of global dividend-paying equities and sukuk (the Islamic equivalent to traditional bonds). Its top 10 holdings include Shoppers Drug Mart Corp., Canadian National Railway Co., Teck Cominco Ltd., Cameco Corp. and Manitoba Telecom - strong companies on the Dow Jones Islamic Market Canadian Index that also perform well in Western circles.

"These funds are designed ... primarily for retirement [down the road] because they are treated as balanced funds and have lower volatility," says Mr. Khan. "At the end of the day, people will buy in because they believe in the principles of it and feel good about it."

"Currently, sharia-compliant investing globally stands at about $5-billion," says Zaigham Hasan Shah, executive vice-president and chief investment strategist with frontierAlt.

"In the Gulf region last year, two-thirds of newly launched mutual funds were sharia-compliant," he says. "It is an offshoot of what is happening in the Islamic financial industry globally, valued at about $250-billion, and growing at about 10 to 15 per cent annually for the last 10 years."

***

Ethical investments at work

Here is a sampling of socially responsible and faith-based mutual funds.

***

Total return
FundInception20073 years*5 years*Year-to-date return**MER
Acuity Social Values Canadian EquitySept. '00 3.5% 9.4%16.2%-4.3%2.50%
Acuity Social Values Global EquitySept. '00 -5.9% 3.8% 6.9%-5.2%2.95%
Desjardins Ethical Canadian BalancedDec. '99 -2.0% 4.5 % 6.0%-2.5%2.99%
Ethical Canadian IndexMay '04 9.1%14.0% --1.9%1.00%
Ethical Special EquityJan. '95 8.5%10.7%17.5%-5.9%2.73%
iShares Canadian Jantzi Social IndexMay '07 - - --3.4%0.50%
MacKenzie Unicersal SustainableOct. '00 -6.9% 4.9% 6.4%-5.9%2.72%
Meritas Jantzi Social IndexMarch '01 5.3%12.3%14.7%-3.5%1.94%
Meritas International EquityMarch '01 -0.8% 6.1% 7.4%-8.9%2.89%
frontierAlt Oasis CanadaJuly '06-10.6% - - 4.2%2.25%
frontierAlt Oasis World-FJuly '06 -7.0% - --4.9%2.25%
RBC Jantzi BalancedJuly '07 - - --3.2%2.00%

*As of Jan. 31, 2008

**As of Feb. 22, 2008

DOUGLAS COULL / THE GLOBE AND MAIL

SOURCES: GLOBEFUND.COM, WWW.MERITAS.CA AND WWW.FRONTIERALT.COM

© 2007 The Globe and Mail. All rights reserved.

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