Cash, fixed income, equity and where to put them – asset allocation, in other words – is what plays on the minds of portfolio managers these days, more than I can ever remember. With the seemingly herculean efforts of governments and central banks around the world to continue to prop up anemic and crumbling economies, transparency and clarity comes at a premium. And because fiscal policies are so important to a healthy growing economy, especially with the burden of debt that many industrialized nations carry, it seems too often these policies and outcomes are held hostage by ideology and political interest. As investors, we really are up against one of the most complicated, frustratingly opaque investment environments in recent memory. The big question is, How do we deal with it?
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Including socially responsible products in their investment portfolio is of growing importance to Canadian investors. Between 2000 and 2010, Canadian assets in socially responsible investing (SRI) mandates grew by an average of 27% per year to an impressive $530 billion. Most of these assets are currently represented by institutional investors, including leading pension plans such as the Ontario Teachers Pension Plan and Canada Pension Plan. As is often the case, retail investors are likely to follow this institutional trend, and advisors with a good understanding of how SRI mandates operate will no doubt be ideally placed when it comes to gathering these assets. With that in mind, this article looks at the approach of RBC Global Asset Management (RBC GAM) to SRI by examining how we incorporate social responsibility into long-term investment goals, and by specifically examining several energy companies included in our SRI universe.
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