Investing the socially responsible way

Some investors want their money used in ways they consider socially responsible. The criteria for that may change from individual to individual, but here’s a fund that tries to address that concern.

Among socially responsible mutual funds, one stands out for its conservative style, low cost and comparable returns. It’s Phillips, Hager & North Community Values Canadian Equity Fund (RBF1620 (NL)).

Originally, socially responsible investing, or SRI, focused on avoiding the securities of companies engaged in ethically questionable practices, such as the production and distribution of alcohol, tobacco, pornography and military weapons. Over time, however, SRI has expanded to include a wider variety of social and environmental concerns.

Today, SRI also involves investing in the securities of companies that actively engage in socially responsible business practices. These include companies that show leadership in environmental practices and are committed to complying with environmental regulations, that respect workers rights and encourage equal employment opportunities, that adhere to strong corporate governance practices, and that don’t support the acts of repressive regimes.

How the fund does it

To execute this investment approach, PH&N has partnered with Sustainalytics, a global leader in environmental, social and governance, or ESG, screening to deliver SRI offerings. Companies with poor ESG practices relative to their industry peers are removed during the screening process.

Community Values Canadian Equity Fund’s portfolio adviser then applies a growth-oriented investment approach to the best performers, focusing on above-average financial fundamentals while considering broader factors, such as economic trends and interest rates.

The fund has above-average returns among Canadian equity funds. It has a 10-year compound annual growth rate of 8.3 per cent, ranking in the second quartile of the category. Its latest five-year growth rate is 10.2 per cent, also a second-quartile performance. Its three-year performance of 13.8 per cent is even better, ranking in the top quartile. And this past year, it has gained 29.1 per cent to rank in the top quartile again.

The fund sticks mainly with large-cap companies. Its top holdings include three of Canada’s big five banks, Canadian National Railway, Suncor Energy and Canadian Natural Resources.

The fund charges no load and has a low management expense ratio of just 1.20 per cent, giving it a good head start over its peers as far as future returns are concerned.

We recommend this fund only if the socially-conscious nature of its investing is important to you. Otherwise, its restrictive focus could limit future investment results.


PH&N Community Values Canadian Equity Fund is a long-term buy if you want a growth-oriented fund that practices socially responsible investing. You should also have a tolerance for medium investment risk.


Canadian Mutual Fund Adviser, MPL Communications Inc.
133 Richmond St. W., Toronto, On, M5H 3M8, 1-800-804-8846

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