Category: insight
6 Min read | May 18, 2023

Three Years and Counting: NEI Global Sustainable Balanced Fund

  • ESG
  • Impact investing
An ariel view of several farms and windmills
Summary:

We celebrate an all-in-one sustainability-focused solution. NEI Global Sustainable Balanced Fund.

Today we celebrate an all-in-one sustainability-focused solution.

What goes into a creating a balanced responsible investing solution? Assembling the right pieces to deliver a portfolio that has provided both positive performance and impact beyond returns requires a diligent, detailed process. Three years ago, NEI Global Sustainable Balanced Fund was introduced.

 

History

The launch of NEI Environmental Leaders Fund in 2016 introduced a global equity solution focused on environmental markets and resource optimization. What made this equity solution different was the investment mandate and the expertise of the sub-advisor, Impax Asset Management. Impax is a recognized global specialist in sustainable investing, with a focus on investing in the transition to a more sustainable economy.

 

Performance (%) - As April 30, 20231

 

3 mo

6 mo

YTD

1 yr

3 yr

5 yr

10 yr

NEI Global Sustainable Balanced Fund Series F

1.54

11.47

6.48

5.59

6.34

4.45

3.97

Benchmark 1: 60% MSCI ACWI NR Index (C$) and 40% Bloomberg Barclays U.S. Aggregate Index (C$ hedged)

2.07

9.86

6.70

4.63

5.22

5.10

5.57

 

Many advisors asked for the same leading impact equity strategy within a balanced fund structure, to provide a solution that could help reduce volatility while generating potential alpha from a fixed income universe focused on sustainable credit. In response to that demand for a 60/40 balanced solution we introduced NEI Global Sustainable Balanced Fund on May 1, 2020*. The Fund features a 60% equity allocation to NEI Environmental Leaders Fund and a 40% fixed income sleeve also managed by Impax Asset Management that is diversified by issuer, with a distinct focus on impact bonds.

 

Reasons to invest in NEI Global Sustainable Balanced Fund

Since inception the fund has delivered positive returns with the same high standards of impact and responsible investing Impax is known for.

I am proud to see NEI Global Sustainable Balance Fund hit a three-year milestone while establishing a track record of strong performance...

John Bai, Senior Vice President, Chief Investment Officer, NEI Investments

“This provides more evidence that investors can receive strong investment performance while also making a positive impact on environmental and social issues. This wouldn’t be possible without Impax Asset Management our long-standing partner who shares the same commitment to creating ground-breaking investment solutions focused on impact while supporting the transition to a more sustainable economy. “ – John Bai, Senior Vice President, Chief Investment Officer, NEI Investments

 

Impax investments have contributed to measurable real-world impact:

 

  • Waste Management Inc (WM) – Named one of the most ethical companies in 2021, WM is one of the world’s largest waste disposal companies. Impax's investment in WM helps to support key ESG priorities and practices. Currently, the services WM provide avoid three times more green house gas emissions than they generate in their operations. It also helps support their aggressive ESG targets, including sizable, planned investments into renewable natural gas, and recycling infrastructure.2
  • Agilent Technologies Inc – Headquartered in Santa Clara, California, Agilent is a global life sciences company. In their 2021 ESG report, they reduced municipal water intensity by 22%, diverted 94% of their solid waste from landfills, increased the share of female leaders from 10% to 30%, and are committed to net-zero emissions by 2050.3

Beyond returns, the fund also provides positive impact by seeking to invest in companies that make  quantifiable environmental and social outcomes. Some of the metrics used to measure positive impact include:

  • Net CO2 impact, defined as CO2 emitted minus CO2 avoided
  • Total water treated/saved/provided
  • Renewable electricity generated
  • Materials recovered/waste treated
  • Number of educational and graduate loans financed
  • Number of affordable housing units financed

The fund has a very strict screening and selection criteria. For example, the Fund will exclude all companies with direct revenue from the following industries:

  • Automatic and/or semi-automatic weapons manufacturing for civilian use
  • Controversial weapons: cluster munitions, anti-personnel landmines, biological and chemical weapons, nuclear weapons
  • Tobacco production and manufacturing

The Fund also excludes all companies with sustained revenues over 10% from the following industries:

  • Nuclear power (with exception for certain companies that are transitioning towards renewable energy or non-nuclear low carbon solutions as explained in the NEI Responsible Investment Policy)
  • Gambling
  • The extraction and production of fossil fuel or owning fossil fuel reserves
  • The distribution of automatic or semi-automatic weapons intended for civilian use
  • The distribution of tobacco and/or tobacco-related products

Companies that are laggards or are engaged in certain levels of unsustainable activities are automatically excluded also.

 

These practices, along with regular oversight and monitoring of environmental and social impact have contributed to the fund’s success, as being a durable all in one impact solution for the last three years and counting.

 

For more information, visit NEI Global Sustainable Balanced Fund.


 

* The NEI Global Sustainable Balanced Fund, previously named the NEI Balanced RS Fund, was established on June 1, 1989.

 

1Source: Morningstar. As of April 30, 2023. Since inception is only provided for Funds with less than 10 years of performance. On May 1, 2020, the Fund’s investment objectives and strategies were changed to an investment approach that includes global fixed income and equity securities with corresponding changes in the portfolio’s benchmark and to the Fund’s sub-advisor. The performance of this Fund for the period prior to this date may have been different had the current investment objectives and strategies been in place during that period. On May 1st 2020, the fund benchmark was changed. Prior to this date the fund benchmark was 30% FTSE TMX Canada Universe Bond Index, 30% S&P/TSX Composite Index, 20% MSCI World Index, 20% Bloomberg Barclays Global Aggregate Index (CAD hedged).

 

2 Waste Management’s 2022 Sustainability Report: https://sustainability.wm.com/report/. 3 Agilent’s Fiscal Year 2021 ESG Report: https://www.agilent.com/about/esg/en/2021-agilent-esg-report.pdf. The examples shown are presented for illustrative purposes only and are not to be viewed as representative of actual holdings. It should not be assumed that any client is invested in the (or similar) examples, nor should it be assumed that an investment in the models has been or will be profitable. Actual holdings will vary for each client, and there is no guarantee that a particular client’s account will hold the examples presented.

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Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus and/or Fund Facts before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Series F units are only available to investors who participate in eligible fee-based programs with their registered dealers that have entered into a Series F Distribution agreement with NEI Investments.

This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters. Please consult with your own professional advisor on your particular circumstances. NEI Investments endeavors to ensure that the contents have been compiled or derived from sources that we believe are reliable and contain information that is accurate and complete. However, NEI Investments makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein. NEI Investments is part of Aviso Wealth.

 

NEI Investments is a registered trademark of Northwest & Ethical Investments L.P. (“NEI LP”). Northwest & Ethical Investments Inc. is the general partner of NEI LP and a wholly-owned subsidiary of Aviso Wealth Inc. (“Aviso”). Aviso is the sole limited partner of the NEI LP. Aviso is a wholly-owned subsidiary of Aviso Wealth LP, which in turn is owned 50% by Desjardins Financial Holding Inc. and 50% by a limited partnership owned by the five Provincial Credit Union Centrals and The CUMIS Group Limited