Morningstar's sustainability ratings cover 178 ETFs

Energy and gold funds among top-rated in category-based system.

Rudy Luukko 14 March, 2016 | 5:00PM
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The Canadian universe of exchange-traded funds is nearly virgin territory for investment managers that define themselves as being socially responsible. Of the 178 Canadian-listed ETFs that have received a Morningstar Sustainability Rating, only one -- the $28-million iShares Jantzi Social Index (XEN) -- has an explicit mandate to screen for environmental, social and governance (ESG) factors.

The selection is much wider in the universe of Canadian mutual funds, even if explicit socially responsible mandates represent only a tiny portion of total assets under management. More than a half a dozen mutual-fund companies offer one or more funds that conduct formal ESG screening.

But as previously announced, there's a new method from Morningstar to assess the degree to which the holdings of managed funds are consistent with good ESG practices. The Morningstar Sustainability Rating system is applied to the broad universe of managed funds, not only those that are marketed as being socially responsible investments.

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About Author

Rudy Luukko

Rudy Luukko  Rudy Luukko is a freelance writer who contributes to on topics involving fund industry trends and regulatory issues. He retired in May 2018 from his position as editor, investment and personal finance, at Morningstar Canada, where he had worked since 2004. He has also worked as an editor and writer for various general, specialty and institutional media, and he has co-authored courses for the Canadian Securities Institute. Follow Rudy on Twitter: @RudyLuukko.

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