environment-glob-green-responsible-investing

Another tailored strategy is shorting the stock of an undesirable company while owning a SRI ETF that includes that stock. Some clients may be against a certain mining stock or object to a company operating in a war zone.

For instance, several public companies operate in the Sudan region, which is under sanctions for human rights violations. Such companies include Petrochina Company, the largest oil producer in China. PTR’s parent, China National Petroleum Corporation, helps the Sudanese explore and develop energy reserves.

Tactic to establish a Canadian non-oil sands SRI ETF portfolio

Jantzi (XEN)
Short (CLO) 20%
Jantzi Social Index (XEN) iShares Oil Sands (CLO) S&P/TSX 60 (XIU)
3 month 5.06% 3.70% -6.94% 3.21%
1 year 11.55% 8.54% -15.70% 6.56%
3 year 4.95% 4.10% -7.28% 3.85%
5 year 2.62% 1.80% -9.39% 1.32%
Risk 16.87% 23.65% 36.07% 23.74%

Socially responsible ETFs in North America

Socially Responsible ETFs Symbol MER Location
iShares Jantzi Social Index XEN 0.55% Canada
iShares KLD 400 Social Index DSI 0.50% U.S.
iShares KLD Social Select Index KLD 0.50% U.S.
PAX MSCI EAFE ESG EAPS 0.55% U.S.
PAX MSCI North America NASI 0.50% U.S.
Huntington Ecological Strategy HECO 0.95% U.S.
Guggenheim Solar TAN 0.65% U.S.
Powershares Cleantech PZD 0.67% U.S.
Powershares WilderHill Clean Energy PBW 0.70% U.S.
Powershares WilderHill Progressive Clean Energy PUW 0.71% U.S.
AdvisorShare Global Echo GIVE 1.70% U.S.

Tactic to establish a Canadian non-oil sands SRI ETF portfolio

Jantzi (XEN)
Short (CLO) 20%
Jantzi Social Index (XEN) iShares Oil Sands (CLO) S&P/TSX 60 (XIU)
3 month 5.06% 3.70% -6.94% 3.21%
1 year 11.55% 8.54% -15.70% 6.56%
3 year 4.95% 4.10% -7.28% 3.85%
5 year 2.62% 1.80% -9.39% 1.32%
Risk 16.87% 23.65% 36.07% 23.74%

A glossary of ETF terms

Underlying securities: Certain types of securities issued by corporations.

Net asset value (NAV): In mutual funds, the market value of a fund share; synonymous with bid price. NAV is calculated after the close of exchanges each day by taking the closing market value of all securities owned plus all other assets like cash, subtracting all liabilities, and then dividing the result by the number of shares outstanding — this last number can vary, depending on purchases and redemptions. This definition is specific to mutual funds.

Market price: Last reported price at which a fund was sold on the market. For any inactively traded security, evaluators have to determine a market price if needed. For ETFs, market makers look at the last prices and the depth of all securities in the basket of the fund to calculate its price.

Intraday value: Stocks can reach high or low prices, and then change value again, within the trading day. An ETF’s intraday value is its estimated fair value based on the most recent highest and lowest same-day price of its underlying assets. It is used to gauge the fund’s current market price against an intraday NAV estimate.

Bid-offer spread: The difference between a fund’s bid and offer prices. The two prices together comprise a quotation. For instance, if an ETF is trading at $15.30, market makers will set the spread at $15.29-to-$15.31 to show its highest bid and lowest offer. This is also know as the bid-ask spread.

Sources: Barron’s Dictionary of Finance and Investment Terms, Fifth edition; ProShares.com.

Mark Yamada is president and CEO of PUR Investing Inc., a portfolio manager specializing in disruptive strategies for investors, their advisors and pension plans. PUR is a registered portfolio manager.

Mark Yamada is President of PÜR Investing Inc., a software development firm. Disclosure: PÜR Investing Inc. provides risk-based model portfolios to Horizons ETFs.

Originally published in Advisor's Edge Report