Socially responsible investing (SRI) couples an investor’s societal, environmental, and ethical values with their investment decisions. SRI is the process of making investment decisions in pursuit of social and environmental returns in addition to seeking financial returns producing a “triple bottom line.”
There are many approaches to SRI investing in Canada. One of the more robust ways of implementing a SRI mandate is through a three pillar approach which includes screening, shareholder advocacy, and community development investment (CDI).
Meritas SRI Funds is the only SRI fund family in Canada with an ongoing commitment to community development investment. CDI is a cornerstone of our Socially Responsible mandate where we allocate up to 2% of each Meritas SRI Fund portfolio to CDI initiatives. CDIs, sometimes referred to as impact investing, are investments in local community oriented investment (microfinance) programs that are intended to provide economic growth and opportunity in areas that might not normally have access to investment capital. The magnitude of impact that CDI can have is far greater than the actual dollars and cents.
Meritas SRI Funds’ CDI mandate is facilitated through microfinance placement agencies. For example, one of our partners is Oikocredit, a global private microfinance funding organization head-quartered in Amersfoort, Netherlands. Oikocredit is one of the world’s largest sources of private funding to the microfinance sector. They also provide credit to trade cooperatives, fair trade organizations, and small-to-medium enterprises in the developing world.
Meritas SRI Funds’ investment with Oikocredit generates a fixed interest rate comparable to a government issued bond. But it’s not the financial returns that excite us most about these investments, it is the social returns that have the greatest reward when it comes to CDI.
Each of the 12 Meritas SRI Funds include the CDI mandate. And with the exception of the Meritas Monthly Dividend Fund and Meritas Income Fund, each fund has more than a 10-year performance track record.
In addition, Meritas SRI funds can form part of a personalized mix of traditional and socially responsible investments through the OceanRock Investment Portfolio Series. While some of these portfolio products are more recent, we would expect their historical performance to be in-line with the weighted average mix of the underlying funds that they comprise.
Community Development Investment is not a philanthropic endeavour, it is investment capital injected in a viable and sustainable business venture with the expectation of a positive return. Micro loans are issued after careful due diligence and understanding of the business idea. These loans, like any loan, are subject to repayment conditions, charge interest, and are subject to a set of parameters that include risk and credit worthiness as well as education, training and savings requirements.
Similar to a bond investment, providers of funds used to fund CDI typically receive a reasonable annual interest rate on their invested capital. In addition to this annual interest income, they also have the knowledge of the social returns as reports of success come from the regions where their capital is deployed.
At Meritas Funds, we believe a robust approach to socially responsible investing is an avenue to invest your financial future in a socially just and environmentally friendly manner. Investing with Meritas SRI Funds is more than just buying a mutual fund and the returns for our investors are more than just a number. When you invest in Meritas SRI Funds you have the opportunity to impact hundreds of families in communities where access to capital and economic advancement is limited, and that is what socially responsible investing is about at Meritas SRI Funds.
For more information on Meritas SRI Funds, as well as discretionary investment services and professionally managed SRI and traditional funds, please visit us at OceanRock Investments Inc.
Gary Hawton, CFA, is President of OceanRock Investments Inc.
Notes and Disclaimers
Meritas SRI Funds a division of OceanRock Investments Inc. The information contained in this article is provided by OceanRock Investments Inc. (OceanRock) for general informational purposes only and is not intended to provide, and should not be relied upon as providing, legal, accounting, tax, financial, investment or other advice, or a solicitation to buy or sell any securities. The information was obtained from sources believed to be reliable, but cannot be guaranteed to be current, accurate or complete. OceanRock is not responsible for any errors or omissions contained herein.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.