Can we combine values and attractive returns?
 There has been an increase in the amount of investors searching for this type of investment, which not only have a positive impact on their environment or society, but which also generate interesting returns.
What is an ethical investment?
Ethical mutual funds invest in companies that have respectable work relationships as well as in countries that ensure racial equality & ban the use of child labour. The managers of these funds exert pressure on desired corporations to become a part so that they may better their social and environmental responsibilities.
They may also intervene with the companies at the time of their shareholders’ assemblies. For example, in 2006, at the shareholders’ assembly of Alcan, a proposition supported by 37 % of shareholders, aimed at improving the conditions of their project to extract bauxite in India. A negotiation followed with Alcan and important progress was registered on both the social conditions level and environmental consequences of the plan.
How do we select "socially responsible" companies?
Be careful!
It is not because a fund is considered « ethical » that it does not hold any companies that have had negative publicity in the media. Among many, investors are often surprised to learn that Wal-Mart and Pétro Canada are often found in many of these funds.
Investing socially responsible operates according to different filters, which then determine the stocks that may or may not be held by the fund.
Some funds use negative filters so that they may exclude certain sectors of activity. In general, the companies that manufacture harmful products, such as tobacco, weapons and nuclear technology, are excluded immediately from ethical funds. However, Shell was still accepted into certain ethical funds because of its investment in renewable energies, which would make it more ethical than its competitors in the petroleum sector.
Other funds apply a positive filter, which means that they evaluate the companies based on a grid of criteria. The managers then select the companies that have successfully passed the test.
How to buy ethical investments?
The simplest way to invest in « ethical » companies is through mutual fund companies that are specialized in this domain.
Presently in Canada, we have approximately 60 ethical funds of which only 30 are offered in Québec. They have existed since 1990 and total over 115 million dollars of assets under management.
You can also, with the help of your investment advisor, select those companies that rank highest on the list of socially responsible businesses.
Is it profitable to invest in ethical funds?
Of the 30 ethical funds that are listed in Québec, 50 % offer a investment return superior to the average of their sector, the others are ranked near the average. It is therefore possible to make a profit from investing in ethical funds that correspond to our values.
Please do not hesitate to contact me if you would like more information with regards to socially responsible investments.
Disclaimer : "An investment in an OPC may give rise to brokerage fees, trailer fees, management fees ans other fees. You must read the prospectus before making an investment. The OPC are not guaranteed, their values fluctuate daily and their past investment returns are not representative of their future returns." |
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