| Fund Company | Desjardins Investments Inc. |
| Fund Type | Canadian Equity |
| Rating | D |
| Style | Socially Responsible Investing |
| Risk Level | Medium High |
| Load Status | No Load |
| RRSP/RRIF Suitability | Fair |
| TFSA Suitability | Fair |
| Manager | Desjardins Management Team since inception |
| MER | 2.31% |
| Code | DJT 00009 |
| Minimum Investment | $1,000 |
Analysis: For a number of people, socially responsible investing is a great way to help make the world a better place. This particular SRI offering invests in Canadian companies that have implemented “comprehensive environmental management programs” and that have a good environmental compliance record.
To be included in the portfolio, a company must be on the approved list that is determined by the Environmental Advisory Group, which is a committee of independent environmental experts from a variety of different disciplines. This group does not make investment decisions; rather they evaluate the environmental practices of a wide range of companies and determine whether the company can be included on the list to be evaluated from an investment standpoint.
The criteria that the committee uses include such things as the existence of a company’s environmental management system which includes specific goals and targets, a company’s transparency about its environmental information, a third party audit of a company’s environmental management system, as well as any incidents, accidents, public complaints, fines and lawsuits. Companies are reviewed every two years.
Using a fundamentally driven, bottom up GARP approach, the portfolio manager then reviews the company based on investment criteria including the potential for higher than average revenue growth potential.
The result is a portfolio that doesn’t look dramatically different from the broader market, which is heavily concentrated in financials, energy and materials. The portfolio is concentrated, holding 42 names with the top 10 making up more than half of the fund. Portfolio turnover has been high, averaging in the ballpark of 100% for the past five years.
The longer term performance has been strong on a relative basis, but the fund has struggled in 2010, 2011, and thus far in 2012. The cost is reasonable with an MER of 2.32%.
While this is not our favourite SRI fund in the Canadian equity space, it is not a bad offering. We would likely favour the RBC Jantzi Canadian Equity Fund over this one due to its lower cost, lower volatility and stronger historic performance record.