Making Investments With a Clear Conscience

February 1998

With a strong stock market and interest rates at historical lows, mutual funds have increasingly become the RRSP investment of choice. According to one recent survey, 53 percent of Québécois intend to purchase mutual funds this RRSP season, more than double last year's number.

Erna Buffie is a little Burgundy resident who joined this new wave of mutual fund investors last RRSP season. Like so many others, her move was motivated by dismal GIC rates. "If I ever wanted to retire, I couldn't afford not to be in the market any longer," she says.

However, Buffie was cautious. Prepared to invest her money for the long term, Buffie was not concerned about inevitable stock market gyrations. Her dilemma was one of social consciousness. "I avoided any kind of investment for the longest time, because I did not want to participate in companies that I found morally questionable."

Fortunately for investors like Buffie, who want to make money without compromising their values, there are alternatives. They are called "ethical " funds- mutual funds that screen investments for social and /or environmental concerns. There are presently 14 such funds available across Canada, but until now, only two of these have been open to Quebecois. This RRSP season, Quebec mutual fund investors with a social consciousness will have a whole lot more to choose from.

Clean Environment is one of the two Canadian ethical mutual funds available in Quebec. Although the Toronto based mutual fund company has been around for five years, this is the first year its funds are available nation-wide. The other fund-family, based in Vancouver and aptly called Ethical Funds, remains closed to Québécois.

Clean Environment sponsors four funds covering the basic mutual fund categories: Canadian balanced and equity, income and international equity. All four invest in companies with strong balance sheets and a commitment to "sustainable growth", or as President Ian Ihnatowycz explains, "economic growth with technologies that do not destroy the planet".

Ian Ihnatowycz and his partner Hugh McCauley will invest in any sector of the economy as long as they can find companies that meet their criteria of financial excellence and environmental friendliness. This investment philosophy translates into some well-established names like Yogen Fruz International,Trimark Financial and Philip Services Corp., as well as a number of lesser known companies, who are nonetheless leaders in their individual fields of expertise.

In case you thought that ethical investing compromises returns, think again. The annual compound returns of the Clean Environment Balanced Fund and the Clean Environment Equity fund for the 5-year period ending Dec. 31, 1977 were 20.07% and 28.97% respectively. One note of caution: above average returns generally go together with above average volatility and these funds are no exception.