Dear Santa...

A wishlist from Canadian investors

Ian Tam, CFA 23 December, 2020 | 3:46AM
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Santa Letter


Dear Santa,

I think I’ve been good this year. I contributed what I could to my RRSP and TFSA, I resisted the temptation to sell out of the market in February, despite it seeming like the world was going to end, and I’ve regularly balanced my investment portfolio to ensure that my asset allocation is in check. Hopefully I made the ‘nice’ list this year.

If I did, I have 3 things on my wish list for Canada:

  1. Lower Fees: I really wish that more Canadian investors were able to get better deals on mutual fund investments. I know you’ve noticed that here in Canada (despite being relatively close to the North Pole), fees charged for mutual funds after adding up management expenses and distribution/advice costs can be significant, especially when compounded. Let’s educate investors on how to get the best deal on their investments so that they can keep more of their hard-earned cash in their own pockets.

  2. Better ESG Disclosures: I’m really worried about the North Pole because NASA keeps telling me that sea levels are rising each year by 3.3 mm on average, caused by the gradual melting of glaciers. I know that one way to help slow this down is to invest my money in companies that are doing their best in identifying and managing climate-related risks. The problem is, there is no enforceable standard in Canada that requires publicly listed companies to report how they are identifying and managing these risks. The Taskforce for Climate Disclosures (TFCD) framework is one such international standard that has emerged and is used by many companies on a volunteer basis, but in Canada, there is no requirement for publicly listed companies to disclose this type of information. As the world’s sixth largest producer of energy and a country with a steadfast goal to reduce carbon emissions, it would make sense that companies disclose this information so that investors are able to make educated and conscious decisions on where they invest.

  3. Good Tools: Finally, I wish for an easy and consistent way for investors to find sustainable funds and ETFs here in Canada. Many fund providers talk about how they use Environmental, Social, and Governance (ESG) factors when they invest my money, and others are talking about how they are making an ‘impact’. With so many different options, it’s all very confusing. Also, it’s difficult to for me to understand whether the fund companies are actually doing what they are saying. Perhaps regulator-sanctioned set of standards for identifying these types of funds coupled with further investor education could help.

p.s. A pack of wool socks would also be appreciated.

Sincerely,
Ian Tam, CFA
Director of Investment Research, Canada

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About Author

Ian Tam, CFA  is Director of Investment Research at Morningstar Canada. 

 

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