Wednesday, March 07, 2007

Press Release

Socially responsible funds match market performance and produce incremental social dividends, corporate knights survey finds

Ethical funds top performer with 6 of 7 five-shield scores

TORONTO, March 06, 2007 – In its 5th annual survey of Canada's $4.6 billion dollar, 48-fund retail responsible investment (RI) mutual fund market, Corporate Knights magazine found exactly half of the socially responsible equity funds performed in the top 50 per cent of the market, while half performed in the bottom 50, indicating that over time socially responsible mutual funds perform no better or worse than the average fund.

Full results of the Corporate Knights 2007 Responsible Investing Survey are available for downloading at http://www.corporateknights.ca/reports/sri/.

The survey found that the one-year return on socially responsible mutual funds in the equity class up to January 31st, 2007 was 11.37 per cent, while the average Canadian equity fund posted an 11.29 per cent one-year return.

The major factor differentiating socially responsible funds from regular funds is shareholder activism, which is when funds demand action on social and environmental issues, such as preparedness for a carbon constrained economy, in private meetings or at AGMs. 2006 was the first year the Canadian socially responsible investment industry asserted the prudent investors’ voice in public policy debates. The CEOs of Ethical, Inhance, and Meritas funds took the federal government to task for a lack-luster Clean Air Act.

The Responsible Investing Survey evaluated 48 socially responsible mutual funds in balanced, income, and equity asset classes. Funds were awarded a score of one to five shields, with five being the best. A fund’s social qualities made up 50 per cent of its score. The other 50 per cent was based on a fund’s financial quality, determined by its one- and three-year percentile ranking against category peer funds.

The Corporate Knights Social Score, which varied widely from 14 per cent to 95 per cent, was based on how well the fund integrated social and environmental factors into the stock selection process, the presence and execution of community investment, the disclosure of both voting record and policy, and the fund’s degree of engagement with companies in order to help them better appreciate social and environmental risks and opportunities.