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February 28, 2002
New Canadian Social Fund Focuses on Positive Screening
    by William Baue

A Vancouver investment firm recently introduced a social fund that exclusively employs positive screening.


While the United States and Europe garner much attention for advancing socially responsible investing, Canada is also contributing to the globalization of this progressive form of investing. Vancouver-based Ethical Funds, Toronto-based Acuity Funds, and Ontario-based Meritas, among others, all offer socially responsible investment products. The latest socially responsible investment product to hit the Canadian market emphasizes positive screening rather than negative screening.

Earlier this month, Vancouver-based Real Assets Investment Management, Inc. announced the launch of its Social Leaders Fund. Real Assets is the first full-service investment management firm in Canada to focus entirely on socially responsible investing. It is majority-owned by VanCity, Canada's largest credit union.

Whereas many socially responsible investment funds use screens to avoid companies with negative social and environmental records, the Social Leaders Fund focuses on positive screening. It invests in companies with strong records of social and environmental performance.

"We're not screening out companies that we don't like, we're investing in great companies that do great things," said Deb Abbey, portfolio manager and CEO of Real Assets. She is also the co-author of The 50 Best Ethical Stocks for Canadians.

The Social Leaders Fund is available to sophisticated investors, a Canadian designation that varies from province to province. The sophisticated investor category has a minimum purchase price that fluctuates from $25,000 in British Columbia to $150,000 in provinces such as Ontario and Quebec.

The Social Leaders Fund is not restricted to one asset class. The companies in which the fund invests vary widely in size, geographic location, and sector.

"We don't have a capitalization bias," said Ms. Abbey. "We're really looking for companies that have policies and practices that will take us into the next millennium. For the large-cap companies, we were looking for demonstrated leaders in their sectors. Our rationale was that incremental change by a large company has a real ripple effect through the communities where it operates, with its employees, its other suppliers, and its stakeholders."

For example, the fund's portfolio includes Sweden-based Electrolux (ticker: ELUX), which has phased out chlorofluorocarbon chemicals in two major markets, China and Brazil. Washington, DC-based Fannie Mae (FNM), another of the fund's large-cap holdings, assists low- and middle-income Americans in obtaining home mortgages. In 1999, Working Mother magazine named Fannie Mae one of the ten best workplaces for working mothers.

Regarding small-cap firms, the fund favors companies that provide leading-edge technologies and alternative energy. Its holdings include Ballard Power (BLDP), the largest manufacturer of hydrogen fuel cells, and Canadian Hydro Developers (KHD), a energy producer that uses wind power and run-of-river hydro power. Run-of-river hydro power utilizes the natural flow of the river without damming it, thereby not displacing wildlife and communities.

The Social Leaders Fund includes 25 companies presently, but it will grow to include up to 50 companies in the future.

 

 
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