Companies who qualify for ESG investment have had their impacts assessed by Socially Responsible Investing (SRI)
ModernAdvisor’s Socially Responsible Investing (SRI) portfolios allow you to invest in a well-diversified portfolio that is mindful of Environmental, Social, and Corporate Governance (ESG) practices.
How Our SRI Portfolios Work
Our SRI portfolios use the same asset allocation as our Core portfolios, ensuring you maintain broad exposure to global markets. The primary difference lies in the specific ETFs used, which are selected based on their ESG mandates.
1. Strategic Screening and Exclusions
The ETFs in these portfolios typically exclude or endeavor to exclude companies involved in industries with elevated sustainability or headline risks. This generally includes:
Tobacco and Controversial Weapons: Targeted for exclusion by all funds in the SRI suite.
Fossil Fuels: Many of our SRI funds (such as the ESG Advanced suite) endeavor to exclude businesses with an industry tie to fossil fuels (thermal coal, oil, and gas), though exceptions may exist for companies transitioning toward renewable energy.
Other Sensitive Industries: Funds may also screen out companies involved in civilian firearms, gambling, adult entertainment, or nuclear power.
2. Positive ESG Integration
Most of the ETFs we use in our Socially Responsible portfolios evaluate companies on their ESG track record. To be included, companies must generally meet a minimum ESG rating (such as a BBB rating or higher from MSCI), ensuring your money supports leaders in corporate responsibility.
Key Differences from Core Portfolios
While the "DNA" of the portfolios is similar, there are two distinct differences:
Currency Exposure: Our SRI portfolios generally have higher currency exposure than the Core portfolios. This is because the Core portfolios utilize more currency-hedged ETFs, whereas the SRI equivalents are often unhedged. This means your SRI portfolio will be more sensitive to fluctuations in the exchange rate between the Canadian dollar and foreign currencies (like the USD).
Fund Costs: ModernAdvisor charges the same management fee for both portfolio types. However, because SRI ETFs involve complex screening and data analysis, their underlying management expense ratios (MERs) are often slightly higher than those of standard Core ETFs.