Does your client think socially responsible investing means poorer returns?

By Staff | April 18, 2019 | Last updated on April 18, 2019
2 min read
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A misperception that socially responsible funds underperform could be holding back some—though not all—investors from entering the space.

A Mackenzie Investments survey found that 67% of respondents who engage in socially responsible investing (SRI) think they earn lower returns compared to investing in non-SRI funds.

Further, half of investors are resigned to that misperception, with 53% of all respondents saying they’re prepared to sacrifice some percentage of potential return to support companies with values that align with their own.

But lower returns and SRI investing don’t go hand-in-hand.

“Ethical funds have the same opportunity to outperform a benchmark as their more traditional peers, and many have done just that,” said Barry McInerney, president and CEO at Mackenzie Investments, in a release.

Read: Where do gender-focused funds fit in a client’s portfolio?

Another survey finding was that clients might be interested in increasing their SRI exposures regardless of whether or not they already hold such investments.

For example, one-third of Canadians who don’t hold any ethical investments plan to add them to their portfolios, and, of the 31% who currently engage in SRI, two-thirds plan to increase their SRI holdings within the next two years.

While that current adoption rate of 31% might appear low, it’s likely attributable to SRI being a relatively new trend to the retail market, with limited investments available. That will soon change.

“As the space matures and firms ramp up their SRI fund offerings, I believe we’ll see a dramatic increase in adoption rates,” said McInerney. “The data in the study clearly point to significant growth.”

For example, 70% of Canadians say investing in companies that focus on environmental, social and corporate governance is important, the survey found.

The top issues supported by Canadians who currently engage in SRI are the environment (50%), global human rights and animal welfare (28% each), and women’s equality and anti-corruption (18% each).

About the survey: An online survey was conducted by Pollara Strategic Insights with 1,505 adult Canadians between April 4 and 9, 2019. Results have been weighted by gender, age and region, using the latest census data, to be representative of the Canadian population as a whole. staff


The staff of have been covering news for financial advisors since 1998.