Good Active ESG Funds to Consider

If you want to invest in ESG-focused funds, here’s a list to help you start your research

Ian Tam, CFA 22 September, 2020 | 1:28AM
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Magnifying Glass in Forest 

As the world of sustainable investments continues to develop in Canada, we thought to put together an updated list of some of the best performing sustainable funds available today. For transparency, we’ve used these three parameters to compile this short-list of sustainable investments:

1. The fund must be deemed as a sustainable investment based on our analysis of prospectus documents. This may include funds that use ESG Risk criteria in a central part of their investment process, those that seek to make a measurable impact on diversity, carbon, or community, and those that invest in a broad environmental theme like water or renewable energy. More information about our framework for identifying sustainable investments can be found here.
2. The fund must have a Morningstar Sustainability Rating of three globes or higher. This is our assessment of the degree of ESG Risk in the fund portfolio. Using company-level ratings from Sustainalytics, we aggregate the ratings at the portfolio level and compare the fund’s overall ESG risk score to similar funds. Globes are awarded to funds with the lowest levels of ESG Risk when compared to peers.

3. Finally, as an unbiased measure of performance, we’ve screened for funds with a Morningstar Star Rating of four stars or better. The Morningstar Star Rating is a measure of historical after-fee risk-adjusted returns relative to the category to which the fund belongs. Funds awarded five stars have historically outperformed those with four stars. To qualify on today’s list, a fund must have four stars or better.

The funds that met all three criteria are listed here. They are a good place to begin your search for sustainable investments. As always, invest according to your financial goals, risk appetite and time horizon, and consult a financial advisor where necessary. 

Name  Category MER Morningstar Star Rating Morningstar Sustainability Rating YTD Returns 1-yr Returns 3-yr Returns 5-Yr Returns
IA Clarington Inhance Cdn Eq SRI Cl F  Canadian Equity  1.11  ★★★★★  4.09  5.64 5.58  6.99 
RBC Vision Canadian Equity Fund F  Canadian Equity  0.77  ★★★★  3 -4.16  2.48  3.36 5.90
IA Clarington Inhance Growth SRI Port F  Canadian Equity Balanced  1.13  ★★★★★  5 7.39  10.19  8.33 7.05
North Growth Canadian Equity Series F  Canadian Small/Mid Cap Equity  0.70  ★★★★★  3 -0.01  8.64 7.03  9.85 
AGF Global Sustainable Growth Equity F Global Equity  1.19  ★★★★  17.52  23.51  13.56  11.80 
BMO Sustainable Opportunities Glb Eq F  Global Equity  0.90  ★★★★★  5 10.07  18.51  14.25    
IA Clarington Inhance Global Eq SRI Cl F  Global Equity  1.33  ★★★★  4 16.60  24.32 16.14 11.38 
MD Fossil Fuel Free Equity Fund  Global Equity  1.59  ★★★★  3 6.49 10.41  9.90   
NEI Environmental Leaders Series F  Global Equity  1.43  ★★★★  4 9.89  15.85 9.84   
NEI Select Maximum Growth RS Portfolio F  Global Equity  1.39  ★★★★  -0.37  3.65 7.20 7.62
RBC Vision Fossil Fuel Free Glb Eq F  Global Equity  0.98  ★★★★★  3 8.68  17.17 15.41   
Desjardins SocieTerra Maximum Growth A  Global Equity Balanced  2.49  ★★★★  5 6.06 10.12  9.04 7.65
Stone Global ESG Strategy F  Global Equity Balanced  2.65  ★★★★  5 6.95 10.93 5.47 5.37 
Desjardins SocieTerra Growth A  Global Neutral Balanced  2.39  ★★★★  5 6.29  9.23  8.10  6.64 
Desjardins SocieTerra Cleantech F  Global Small/Mid Cap Equity  1.45  ★★★★★  4 5.60 14.62  10.04    
BMO Women in Leadership F  North American Equity  0.38  ★★★★  4 4.27  7.08  9.85   
Desjardins SocieTerra American Equity F  US Equity  1.12  ★★★★  5 11.73  19.28  18.95    
North Growth US Equity Advisor Ser F  US Equity  0.70  ★★★★  8.65 13.86  12.74  12.46 
PH&N U.S. Equity Fund D  US Equity  1.02  ★★★★  3 8.05  13.98  14.52  11.44

Source: Morningstar Direct Data as of September 21, 2020

This article does not constitute financial advice. It is always recommended to speak with and advisor or investment professional before purchasing any of the products listed here.  


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About Author

Ian Tam, CFA  is Investment Specialist at Morningstar Canada. 


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