According to Henderson’s Director of SRI Development, Mark Camanale, “What we wanted to do is make the ‘core service’ of the company recognizable as having social or environmental benefits, instead of trying to work out whether Megabank A because it is more CSR (corporate social responsibility) compliant than Megabank B. We are not aware of any manager that has investigated the total size of the universe of core social investment themes, and then built an investment portfolio exclusively from these ideas.”
So it sounds good in theory, right? But how might such a fund perform? Well, seven of these ten industries significantly outperformed the MSCI World Index in a back test over the one, two, three, five, seven, and ten-year periods ending December 31, 2004. The other three industries outperformed the benchmark the majority of the time in these same periods. The portfolio is outperforming the benchmark currently, returning 16.3 percent over the three-month period ending July 31, 2005, while the MCSI World Index returned 15.4 percent during that period.
Henderson examined over 4,800 companies around the globe operating in the 10 sustainability industries that they identified, and then winnowed this list down to their best 100 investment opportunities. There are a few Canadian companies included in their current portfolio, including Canadian Pacific Railways in the sustainable transport category, Westport Innovations for their technology that allows diesel engines to run on alternative fuels, and notably, Victoria-based Carmanah Technologies for their prominent role in developing solar-powered LED lighting.
Other companies you will find in the Henderson fund include Shimano, one of the world’s leading bicycle parts manufacturers, Ocean Power Technologies, a manufacturer of equipment that generates electricity from the movement of ocean waves, McGraw Hill, a leading publisher of school textbooks, and Ranbaxy Laboratories, an Indian pharmaceutical company that provides generic medicines to developing countries.
Henderson’s investment team has done a great job of putting together a portfolio that would appeal to many socially responsible investors. Let’s hope that the Canadian market will one day evolve in the same manner.