Most financial ‘experts’ advise Canadians to diversify their stock market holdings to reflect a more global perspective. They argue that Canada only represents a small fraction of global market activity, and that investing internationally will both reduce risk and improve rates of return. It’s difficult to argue with the historical numbers behind these recommendations, even though many of us feel that Canada is a safer place for our investments. After all, we enjoy a relatively stable political climate, large budget surpluses, and are fortunate to have critical natural resources that are excess to our domestic needs. Still, you might like to see a brief synopsis of Canadian mutual funds with a ‘socially responsible’ mandate that focus on companies abroad. There aren’t many.
AUM, or assets under management, indicates the size of the fun
MER is the management expense ratio, indicating the indirect yearly cost of owning a fund
Rates of return are historical annual compounded rates as of Jan 31, 2007
All figures sourced from www.globefund.com and believed to be accurate
ACUITY CLEAN ENVIRONMENT GLOBAL EQUITY
|Inception Date – June 1993||1 year return 8.7%|
|AUM $11 million||3 year return 6.2%|
|MER 2.95%||5 year return 1.4%|
Prominent Holdings ITT Corp, Lowes, Toyota, Suncor Energy
Geographic Focus 44% US, 21% Canada, 12% Switzerland
Noteworthy One of Canada’s original ‘socially responsible’ funds, but the paltry assets under management reflect investor disenchantment with this fund. Performance has been relatively poor, it is more volatile than comparable funds, and there is little diversification outside of North America. Not much to recommend here I’m afraid.
ACUITY SOCIAL VALUES GLOBAL EQUITY
|Inception Date – September 2000||1 year return 12.9%|
|AUM $17 million||3 year return 7.8%|
|MER 2.95%||5 year return 4.1%|
Prominent Holdings Toyota, Telefonica, Lowes, Bank of America
Geographic Focus 39% US, 18% Canada, 11% Japan
Noteworthy A better option than it’s cousin above, no matter how you slice it. Acuity manages this and the Clean Environment fund with their own in-house investment team. Due to the similarities between these two offerings, it would not be a surprise to see the two of them merge at some point down the road.
ETHICAL GLOBAL EQUITY
|Inception Date – January 2000||1 year return 19.8%|
|AUM $35 million||3 year return 8.5%|
|MER 2.73%||5 year return 2.5%|
Prominent Holdings Club Med, Coca-Cola, Time-Warner, Nestle
Geographic Focus 47% US, 14% UK, 12% Cash
Noteworthy This fund has a decided bias towards US companies, and after a bit of a rocky launch, has turned out some decent returns. But Coca Cola and Club Med? Profitable yes. Ethical? Guess that depends on your own values. This fund is managed by Manning and Napier Advisors, based in the US since 1970.
ETHICAL INTERNATIONAL EQUITY
|Inception Date – October 2002||1 year return 13.0%|
|AUM $55 million||3 year return 9.9%|
|MER 2.5%||Return since launch 12.1%|
Prominent Holdings L’Oreal, Tesco, Canon, Yamaha
Geographic Focus 18% UK, 16% France, 16% Japan, 10% Cash
Noteworthy This fund makes my preferred list – decent performance, relatively low management fees, and an interesting mix of companies that excludes those based in the US or Canada. Managed by Chicago-based William Blair and Company, in business since 1935 and managing over $30 billion in assets for global clients.
INHANCE GLOBAL LEADERS
|Inception Date – September 2003||1 year return 18.5%|
|AUM $18 million||3 year return 6.8%|
|MER 2.6%||Return since launch 8.2%|
Prominent Holdings Johnson and Johnson, BP, Nokia, Barclays Bank
Geographic Focus 48% US, 31% Europe, 13% Far East
Noteworthy Inhance Investment Management is the evolution of what was once Real Assets Management, a former affiliate of VanCity Credit Union. The fund is managed in-house in Vancouver, and the new team seems to be doing a good job with it. Heavy focus on US companies means giving up on a measure of international diversification.
MACKENZIE SUSTAINABLE OPPORTUNITIES
|Inception Date – May 2002||1 year return 24.3%|
|AUM $19 million||3 year return 10.7%|
|MER 2.7%||Return since launch 3.1%|
Prominent Holdings Deutsche Post, Samsung, China Mobile, Scottish Power
Geographic Focus 40% Europe, 18% US, 15% Japan
Noteworthy This offering from one of Canada’s giant fund companies is worth a close look. It shows good returns over the last few years, and is managed by a global leader in socially responsible investment, UK-based Aberdeen Asset Management PLC. This particular fund comes in a structure that allows investors to switch units for other Mackenzie Capital Class Funds without triggering capital gains.
MERITAS INTERNATIONAL EQUITY
|Inception Date – March 2001||1 year return 17.3%|
|AUM $20 million||3 year return 11.2%|
|MER 2.99%||5 year return 4.1%|
Prominent Holdings Roche, Teva, Nokia, Vodafone, Swiss Reinsurance
Geographic Focus 23% UK, 14% Switz., 12% Japan, Continental Europe
Noteworthy Meritas Mutual Funds were developed by the Mennonite Credit Union to reflect the values of their members. They have outsourced management of this fund to well-respected Thornburg Asset Management, Inc., based in Santa Fe, New Mexico. This fund excludes North American companies from the portfolio, and despite the rather high management fees, also makes my preferred list of international equity funds.