Global equity funds that use sustainable investing approaches.
The screen
Morningstar’s most recent report around sustainable investing shows that global appetites to invest sustainably have softened in the wake of a higher interest rate environment. This pattern holds true in Canada, where fewer sustainable investment funds have been launched in the past couple of years. Yet this scenario contrasts with the sentiments of Canadian investors. According an Ipsos survey of 1,005 Canadians conducted by the Responsible Investment Association of Canada, almost two-thirds (64 per cent) of Canadians are interested in investing sustainably. However, that same survey points to investor concerns around greenwashing, and the general confusion around how to invest sustainably. This is hardly a surprise, given that the approaches to sustainable investing can vary widely from one fund to the next, making comparability a difficult task.
All this said, successful sustainable funds do exist for Canadian investors. Today, I use Morningstar Direct to screen for some examples within the global equity category (the largest category, containing roughly 1,900 share classes of funds and ETFs). To start out, I searched for funds that the Canadian Investment Funds Standards Committee (a cross-industry body that oversees fund categorization in Canada) has flagged as using one or more of six sustainable approaches. Investors are encouraged to read more about the those approaches here, as each caters to different investor preferences. I note importantly that this industry body makes no claims about the funds’ ability to meet sustainable objectives, only that they have disclosed sustainable objectives in their regulatory documents – a very important starting point to understand what claims are being made by the fund.
I then screened for funds that have performed at least on par with their category peers in the past on a risk-adjusted basis, as denoted by a Morningstar rating of three stars or greater. Additionally, I placed a screen on funds that Morningstar believes will outperform category peers on an after-fee basis, denoted by a Morningstar medalist rating of gold, silver or bronze (derived by our qualitative analysis of the people running the fund, the investment process, and the stewardship qualities of the parent firm).
Only ETFs and F-class mutual funds were considered in the search (noting that some F-class, or fee-based mutual funds, may be available through discount brokerages, or via a fee-based adviser who will charge an advice fee separate from the listed management expense ratio, or MER).
Source: Morningstar Direct | Data as of December 5, 2023
The funds that qualified in the screen are listed in the accompanying table, alongside their MERs, historical performance, and ratings. The far right of the table indicates which of the six sustainable investment approaches that the CIFSC has noted appear in prospectus language, noting that a fund can use more than one sustainable investing approach.
This article does not constitute financial advice, it is always recommended to conduct one’s own independent research before buying or selling any of the funds or ETFs mentioned in this article.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
