Performance

Ecoportfolios

There are other investment offerings in Canada that fall under Socially Responsible Investment (SRI) or Environmentally Friendly platforms, primarily, these are based on an initial negative screening process to eliminate companies operating in morally distasteful industries (ie. tobacco, gambling, nuclear), followed by a relative screening to then select the companies that score in the top 50% of their peers on broad environmental, social and governance (ESG) measures. Very little company specific research is involved. Rather than having major (top-10) holdings in Suncor Energy and Canadian Natural Resources, both found as of July 31, 2016 in a well-known competitor’s portfolio that uses ‘more than 100 indicators for environmental, social and governance performance’, the EcoPortfolios Pure Green Portfolio counts leading renewable energy companies as top-10 holdings.

With my EcoPortfolios offering, traditional financial research is used, but I also consider extra financial factors such as carbon emissions, water usage, and corporate sustainability goals. These data, along with a diligent review of public company documents, such as sustainability reports, annual reports or management circulars leads to the inclusion or exclusion of candidate companies. 

June 2017 Commentary

The big news this month for Canadian investors was the rise in the value of the Canadian dollar versus the Greenback by 4%. What makes this appreciation unusual is that it is not happening in conjunction with rising oil prices (they are falling), but rather, in anticipation of a rate increase in July from the Bank of Canada. While this first rate increase in nearly seven years may be welcome news for some investors when it does finally happen, it has a negative impact on the US dollar denominated securities in the EcoPortfolios Pure Green portfolio.

As of May 31, 48% of the portfolio’s assets were denominated in US dollars. It is important to note that the two thirds of these USD holdings are shares of European companies which have American Depository Receipt listed shares (ADRs) that investors can purchase in the US market. The underlying value of these shares is in Euros, and the companies behind them report their earnings in Euros, despite the shares being priced in US dollars for North American investors. So while the relative movements of currencies can on occasion cause a loss such as the 2% decline this past month in the Pure Green portfolio, the gyrations average out with time. Most professionals agree that the added benefit of diversification provided by foreign currencies outweighs the occasional loss when a big move takes place.

Previous Months Commentary

This report is for information purposes only and the performance numbers have not been audited. All performance data represents past performance and is not indicative of future performance. All rates, yields and prices are quoted as of June 30, 2017. The author has taken all usual and reasonable precautions to determine that the information contained in this report has been obtained from sources believed to be reliable and that the procedures used to summarize such information are based on approved practices and principles in the investment industry. However, the market forces underlying investment value are subject to sudden and dramatic changes and data availability varies from one moment to the next. Consequently, neither the author nor Scotia Capital Inc. (SCI) can make any warranty as to the accuracy or completeness of information, analysis or views contained in this report. SCI and the author accept no liability of whatsoever kind for any damages or losses incurred by you as a result of reliance upon or use of this report in contravention of this notice.

This publication has been prepared by an advisor of ScotiaMcLeod, a division of Scotia Capital Inc. (SCI). This publication is intended as a general source of information and should not be considered as personal investment or tax advice. We are not tax advisors and we recommend that individuals consult with their professional tax advisor before taking any action based upon the information found in this publication. Opinions, estimates, and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither SCI nor its affiliates accepts liability whatsoever for any loss arising from any use of this publication or its contents. This publication is not, and is not to be construed as, an offer to sell or solicitation of an offer to buy any securities and/or commodity futures contracts. SCI, its affiliates and/or their respective officers, directors, or employees may from time to time acquire, hold, or sell securities and/or commodities and/or commodity futures contracts mentioned herein as principal or agent. All performance data represents past performance and is not indicative of future performance. SCI and/or its affiliates may have acted as financial advisor and/or underwriter for certain of the corporations mentioned herein and may have received and may receive remuneration for same. All insurance products are sold through Scotia Wealth Insurance Services Inc., the insurance subsidiary of Scotia Capital Inc., a member of the Scotiabank group of companies. When discussing life insurance products, ScotiaMcLeod advisors are acting as Insurance Advisors (Financial Security Advisors in Quebec) representing Scotia Wealth Insurance Services Inc. This publication and all the information, opinions, and conclusions contained in it are protected by copyright. This report may not be reproduced in whole or in part, or referred to in any manner whatsoever, nor may the information, opinions, and conclusions contained in it be referred to without in each case the prior express consent of SCI.