PIM: SRI Core Income and Growth Portfolio

Paul Borisoff - Oct 10, 2017

The SRI Core Income and Growth Portfolio* was up 1.9% in September – and is now up 7.6% in 2017.  In comparison our benchmark was up 1.6% in September and is now up 5.3% in 2017.  Over the most recent 12-month rolling period the portfolio is up 8.1% compared to our benchmark which is up 8.4%.

* These returns are reported as a composite, time-weighted, rate-of-return (gross of fees, net of transaction charges) for all accounts in this mandate.  Long-Term Returns/Benchmark Numbers will be reported in our Quarterly Updates.

After rebounding 1.4% in August the Canadian bond market was hammered again in September finishing the month down 1.3% (as measured by the FTSE TMX Canada Bond Index - 60% of our benchmark).  Year-to-date the Canadian bond market is now up 0.5%, and it is down 3.0% over the last year

Investment grade corporate and government bonds which dominate many conservative portfolios, and typically 40% to 60% of balanced funds, are continuing to present investors with  significant challenges in regard to generating income and acceptable returns.  This may very well remain the case for the foreseeable future.

Asset Allocation – September 30th, 2017:

4.2% Cash, 16.1% Fixed Income, 29.8% Canadian Equity, 49.9% Global Equity.

Recent Portfolio Adjustments and Updates:

We switched our ~3.4% weight in the iShares ESG 1-5 Year USD Corporate Bond ETF to the iShares ESG USD Corporate Bond ETF which extended the duration of this fixed income ETF exposure to 7.3 years from 2.8 years.  ESG refers to the Environmental, Social and Governance screening factors that are additionally employed in the SRI (Socially Responsible Investing) approach.  This ETF has an MER of 0.18% and sees to track the investment results of an index composed of U.S. dollar-denominated, investment-grade corporate bonds that have positive ESG characteristics while exhibiting risk and return characteristics similar to the parent index (Bloomberg Barclays US Corporate Index).  

This change booked a 4.1% loss on the position that we sold – most of it currency related.  The new position was up 0.9% at quarter-end, and is expected to provide more of a counter weight to equity market corrections.

Please note that our next summary and quarterly commentary will be available by Friday, October 13th.  
In the meantime, please do not hesitate to contact me if you have any questions or concerns.


Paul J. Borisoff

Senior Vice President, Portfolio Manager, Senior Investment Advisor