Ethical, or socially responsible, investing has been growing in popularity
recently as more people look to do the right thing with their investment
NEI Ethical Canadian Equity Fund, managed by Calgary based QV Investments, is one of the oldest, and
best-managed funds currently available in the socially-responsible
investing space. Here’s a look at what makes this fund tick.
Darren Dansereau and Joe Jugovic
of QV run this fund pretty much the same way that QV runs all its equity
mandates, with an investment process that focuses on strong companies with
QV takes a long-term view when analyzing a company, and looks for companies
with strong balance sheets, excellent cash flow, sustainable barriers to
entry, and competitive strengths. They like to see management teams that
have a stake in the business, as this helps to better align their interests
with their investors. Once they have identified a potential investment, NEI
will review to make sure it meets their criteria for Sustainable Investing.
The sector mix, perhaps surprisingly, isn’t a lot different than many more
traditional funds. It has nearly 17% invested in energy, which may surprise
some. However, the firms they invest in take a responsible approach in the
space. For example, Suncor is focused on climate change, while AltaGas is
working with first nations in a very inclusive way. As you’d expect with a
fund from this company, the fund’s overall
MSCI ESG score comes in at a solid 6.2/10, compared with an average 5.2/10.
Top holdings as of Sept. 30 included
Loblaw Cos. Ltd. (TSX: L),
Canadian Imperial Bank of Commerce (TSX: CM),
Bank of Nova Scotia (TSX: BNS),
Power Financial Corp. (TSX: PWF), and
Canadian National Railway Co. (TSX: CNR).
Performance has been strong, with a 5-year average annual compounded rate
of return of 8.7%, outpacing the S&P/TSX Composite Index. It has lagged
of late, on its underweight cyclical holdings. Volatility has been less
than the broader market, however, and the downside protection has been
This fund is a great example that SRI investing doesn’t have to mean
sub-par investment performance.
NEI Ethical Canadian Equity Fund
Large Cap Value
QV Investments: Darren Dansereau and Joe Jugovic, both since June 2009
NWT072 (front-end load)
Dave Paterson, CFA, is the Director of Research, Investment Funds for
D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due
diligence on a variety of investment products. He is also the publisher
Dave Paterson’s Top Funds Report,
offering regular commentary and in-depth analysis of Canada’s top
investment funds. He uses a unique analytical approach to identify
funds with strong, risk-adjusted returns, and regularly publishes his
insights and analyses in Fund Library.
Notes and Disclaimer
© 2017 by Fund Library. All rights reserved. Reproduction in whole or in
part by any means without prior written permission is prohibited.
Commissions, trailing commissions, management fees and expenses all may be
associated with fund investments. Please read the simplified prospectus
before investing. Mutual funds are not guaranteed and are not covered by
the Canada Deposit Insurance Corporation or by any other government deposit
insurer. There can be no assurances that the fund will be able to maintain
its net asset value per security at a constant amount or that the full
amount of your investment in the fund will be returned to you. Fund values
change frequently and past performance may not be repeated. No guarantee of
performance is made or implied. This article is for information purposes
only and is not intended as personalized investment advice.