Why invest in ModernAdvisor Socially Responsible Portfolios
earn solid investment returns
Numerous studies* have shown that Socially Responsible Investments perform just as well, if not better, than traditional investments. The reason? Companies that adhere to ESG principles are typically better governed, have a more engaged workforce, and have lower legal risk.
help protect the environment for generations to come
ModernAdvisor’s Socially Responsible Portfolios invest in funds that have an Environmental, Social, and Governance (ESG) mandate. While ESG investments are not the same as Fossil Fuel Free or Green funds, they exclude the worst environmental offenders and have a much better environmental track record compared to a typical investment fund.
invest with a clear conscience
ModernAdvisor Socially Responsible Portfolios exclude investments in questionable businesses such as controversial weapons manufacturers and companies involved in the production and distribution of tobacco products.
The Funds We Invest in
xen
xen | ishares jantzi social index etf
This ETF invests in Canadian companies. Companies are screened on environmental, social and governance factors on a scale from 1 to 5, where 5 indicates significant controversies. Companies with 1 or more scores of 4 or 5 are ineligible. Companies involved in military contracting, nuclear power or tobacco are also ineligible.
dsi
dsi | ishares msci kld 400 social etf
This ETF invests in US stocks and excludes companies involved in nuclear power, tobacco, alcohol, gambling, military weapons, civilian firearms, GMOs and adult entertainment. The remaining companies are screened on environmental, social and governance factors and must maintain a minimum B rating.
esgd
esgd | ishares msci eafe esg optimized etf
This ETF invests in companies in Europe, Australasia, and the Far East. Companies involved in tobacco or controversial weapons are excluded. The remaining companies are screened on enviornmental, social, and governance factors and must maintain a minimum B rating.
esge
esge | ishares msci em esg optimized etf
This ETF invests in companies in Emerging Markets such as China and Brazil. Companies involved in tobacco or controversial weapons are excluded. The remaining companies are screened on environmental, social, and governance factors and must maintain a minimum B rating.
clf
clf | ishares 1-5 year laddered government bond index etf
This ETF invests only in Canadian government bonds. By avoiding corporate bonds, it will not have any exposure to bonds from companies that may have a questionable environmental, social, or governance record.
zef
zef | bmo emerging markets bond hedged to cad index etf
This ETF invests in governments bonds from countries like South Korea, Russia, Mexico and Indonesia. This is the only emerging market bond ETF available in Canada.
reet
reet | ishares global reit etf
This ETF invests in Real Estate Investment Trusts and has received a ‘High’ rating from Morningstar for sustainability.
Frequently Asked Questions
What is Socially Responsible Investing?
Socially Responsible Investing (SRI) is an investment discipline that considers environmental, social, and corporate governance criteria to drive long-term social impact as well as competitive financial results. To learn more about Socially Responsible Investing, click here
How are investments in a Socially Responsible Investment Portfolio selected?
Socially Responsible portfolios typically exclude investments in businesses that are engaged in the manufacturing and distribution of harmful products such as tobacco and controversial weapons. Some SRI funds also exclude investments in the alcohol, gambling, and adult entertainment industries. Remaining companies are screened on social, environmental, and governance (ESG) factors and must maintain a minimum rating in each category to be included.
Do Socially Responsible Portfolios perform as well as traditional portfolios?
It remains an open question whether socially responsible portfolios can reliably match or beat the financial performance of traditional portfolios (source, source), and while it is important to disclose the latest research to investors, there are other important factors when making the case for socially responsible investing.
Socially responsible investing is a way for individuals to act on their values and influence corporate practice and public policy. This research paper from the Sustainable Investment Forum (US-SIF) describes many of the successes of SRI over the past twenty-five years. The Executive Summary starting on page 4 provides highlights which could be used to draft messaging around this aspect of SRI.
Another argument in favour of socially responsible investing is as a risk mitigation strategy, particularly in relation to climate change. Investment is a bet on future performance. Estimates of future performance must take into account the context in which all businesses and governments will perform. It feels safe to assert that business as usual is not a safe bet. The US-SIF report linked above touches on this briefly in a discussion of fiduciary responsibility.
How are ModernAdvisor Socially Responsible Portfolios different from its Core portfolios?
Our Core portfolios and SRI portfolios use the same asset allocations so you are not missing out on international or emerging market exposure by choosing an SRI portfolio. The main difference between our Core and SRI portfolios is we use different ETFs in our SRI portfolios. The ETFs in the SRI portfolios use investment screens to avoid companies that have poor environmental, social, or corporate governance (ESG) records, or have received high sustainability ratings from Morningstar. The ETFs in the SRI portfolios also won’t invest in companies that produce tobacco or military weapons at a minimum, while some go much further and avoid alcohol, gambling, nuclear power, and GMOs. Since the ETFs in the SRI portfolio are different, the cost and yield are different from the Core portfolios. A larger portion of our SRI portfolios are made up of ETFs that are listed in the US. For this reason our SRI portfolios are more sensitive to changes in the currency exchange rate between Canadian and US dollars.
Do ModernAdvisor Socially Responsible Portfolios cost more?
ModernAdvisor charges the same low fee for managing your account regardless of whether you choose our Socially Responsible or Core portfolio. However, some of the Exchange Traded Funds (ETFs) in our Socially Responsible portfolios have a slightly higher fee than their core counterparts. On average, the ETF fees for ModernAdvisor’s Socially Responsible portfolios are approximately 0.20% per year higher than Core portfolios.
