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Socially responsible investment funds hold their own

What are we looking for?

Top performing funds over the past year that also have a good long-term track record.

The screen

We looked for the top performers among the hundreds of Canadian equity funds for the year ended Feb. 28. Then we further sorted for the strongest 10-year performance and compared the results to the total return on the S&P/TSX, in Canadian dollar terms. Closed funds as well as U.S. dollar, segregated and duplicate versions of funds were excluded.

What did we find?

This screen turned up some well-known winners such as Bissett Canadian Equity and Mawer Canadian Equity, but also shows that investors can make money while also doing good.

Several of the top funds were socially responsible investment (SRI) products, which try to balance social concerns with long-term returns. The top SRI performer was NEI Ethical Canadian Dividend A, which aims to encourage the companies it owns to improve their environmental, social and governance performance. The fund posted a 13-per-cent gain for the year to Feb. 28, compared to the S&P/TSX total return of 4.6 per cent. The fund's 10-year annualized gains were 9.2 per cent.

Some 20 per cent of all assets under management in Canada are now invested in SRI funds, according to Ian Bragg, associate director at the Toronto-based Social Investment Organization. That works out to more than $600-billion of Canadian capital currently invested in SRI financial products.

Fees vary as much as their non-SRI counterparts, but Mr. Bragg says managers of SRI funds are also advocates. "If you're buying the Meritas [Jantzi Social Index], NEI or PH&N [Community Values Canadian Equity] fund you're also investing in a manager who is going to engage companies on your behalf," he said, pointing to issues such as climate change, human rights and executive pay.

In this screen, some of the best one-year performers such as Mawer Canadian Equity and Leith Wheeler Canadian Equity weren't SRIs, but their fees were among those at the lower end. That may help improve performance over the long term.

While all of the funds outpaced the benchmark's 4.6-per-cent gain over one year, the picks had a little more trouble keeping up over the last decade.

Only two funds in the screen - again Mawer and Leith Wheeler - managed to top the S&P/TSX over the longer period.



% rtn (Feb. 28)% returnAssets
Bissett Canadian Equity-A15.4%8.1%13.9%-6.9%18.0%38.7%-33.4%2.47434.3
Mawer Canadian Equity15.3%10.5%12.7%1.9%13.7%29.5%-29.7%1.23236.4
Leith Wheeler Canadian Equity B14.2%9.9%13.6%-6.2%15.4%27.5%-32.9%1.56117.8
NEI Ethical Canadian Dividend A13.0%9.2%9.5%-4.6%12.5%20.0%-27.2%2.55276.5
Beutel Goodman Canadian Equity-D11.9%9.6%10.8%-7.0%15.5%24.1%-22.9%1.363,481.4
Meritas Jantzi Social Index11.3%7.8%9.9%-10.5%9.9%36.1%-36.0%2.195.4
Fidelity True North-A9.1%8.5%8.0%-8.4%12.3%30.3%-34.6%2.49311.3
Mackenzie Saxon Stock Fund-SI9.0%7.8%12.7%-14.8%18.5%35.3%-32.8%2.07209.3
PH&N Community Values Cdn Equity-D8.8%8.1%10.5%-9.1%10.8%34.2%-33.2%1.2218.5
Social Housing Canadian Equity8.2%7.8%10.4%-8.3%9.4%28.1%-31.0%1.2378.9
Trimark Canadian Opportunity Class7.1%7.4%6.6%-10.2%9.4%28.3%-26.5%2.4947.3
PH&N Canadian Equity-D6.8%7.7%8.9%-11.2%12.5%34.9%-35.5%1.18558.5
Mackenzie Focus All Canadian Class6.7%5.7%12.0%-10.7%10.6%19.1%-29.7%2.585.0
BMO Equity6.4%7.5%4.8%-8.9%11.6%21.9%-27.0%2.371,288.1
AGF Canada Class6.2%6.4%8.9%-12.1%8.0%19.5%-29.5%2.5063.6
S&P/TSX Total Return4.6%9.7%7.2%-8.7%17.6%35.1%-33.0%
Source: Lipper

© 2007 The Globe and Mail. All rights reserved.

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