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February 05, 2003
Meritas Launches Four New SRI Funds for Canadian Group Pension Plans
    by William Baue

A mainstream group pension plan provider in Canada contracted Meritas Financial to create and manage four new SRI mutual funds for retirement plan investors.


Yesterday, Meritas Financial announced the launch of four new socially responsible investment (SRI) mutual funds that will be available through Group Retirement Services, a division of Great-West Life Assurance Company and London Life Insurance Company. The funds include one balanced fund and three equity funds. Of the three equity funds, one invests in the Canadian market, one in the U.S. market, and one in the global market.

Meritas was founded in April 2001 as a joint venture between the Mennonite Savings and Credit Union (Ontario) Limited, the Mennonite Foundation of Canada, and Mennonite Mutual Aid.

"Group Retirement Services is one of the leading providers of group pension plans in Canada," said Meritas CEO Gary Hawton. "If an employer has a group pension plan through Group Retirement Services, for the first time ever, all of their employees will have the opportunity to have a socially responsible option in their pension plan."

The balanced fund allocates 40 percent of its assets to equities, and the remaining 60 percent is divided among fixed income vehicles that include money markets, mortgages, and bonds. The equity funds are modeled on Meritas's existing equity funds: the Meritas Jantzi Social Index Fund, the Meritas U.S. Equity Fund, and the Meritas International Equity Fund.

All four new funds apply the same positive and negative screens that Meritas employs on all its funds. Meritas's exclusionary screens encompass alcohol, tobacco, military, gambling, pornography, and nuclear power production. Positive screens include environmental impact, aboriginal rights and concerns, corporate governance issues, domestic and international human rights policies, and gender equity, among others.

Meritas funds also commit up to two percent of the assets in all their mutual funds to community investment in domestic and international community developments initiatives (CDIs). As well, Meritas practices shareowner action, engaging companies in dialogue to promote improved social, environmental, and ethical practices.

The four new SRI funds allow pension fund investors to create portfolios that reflect their risk tolerance and investment objectives. Conservative investors can fill their portfolio with the balanced fund to maintain the 60/40 split between fixed income and equities. More aggressive investors can increase the equity component of their pension accounts by adding portions of the three equity funds to the balanced fund or by investing exclusively in the equity funds.

"It's not just a matter of slapping one fund on the shelf so that we can say we've got an SRI option," said Bill Kyle, vice president of Group Retirement Services for Great-West and London Life.

Consumer demand prompted Group Retirement Services to make this move into the SRI arena.

"We had had a number of requests for SRI funds and in particular Meritas as a fund provider," Mr. Kyle told SocialFunds.com.

Group Retirement Services's due diligence confirmed Meritas's strength as an investment advisor and mutual fund manager. Likewise, Meritas's research deemed Great-West and London Life to be socially responsible corporations.

The establishment of SRI options in group pension plans bodes well for the growth of socially responsible investing in Canada.

"It brings SRI much more to the forefront in Canada, into the mainstream," said Mr. Hawton.

"SRI is a trend that we expect will grow over time, so these funds will position us well for any future requests," added Mr. Kyle. "We'll monitor both the performance and the demand."

 

 
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