In late January, FÉRIQUE Fund Management launched three new mutual funds with an emphasis on sustainable development and innovation. Decisively focused on current and future issues, the three funds were designed with the same twofold objective: offering to unitholders new investment vehicles that will enable them to help overcome major global challenges with their assets while improving the resiliency of the FÉRIQUE Funds by increasing exposure to investment themes related to the transition to a more sustainable global economy and to innovation.
While the pandemic that has been raging on for over a year revealed - or in some cases magnified - global structural issues, the new funds allow for the sound management of certain emerging risks, generate new investment opportunities and increase diversification.
Combining fixed income and sustainable development
Among the newcomers, the FÉRIQUE Global Sustainable Development Bond Fund is a globally diversified fund composed mainly of fixed income securities from government and corporate issuers. The securities held in the portfolio help finance projects or companies strivingto uphold principles of sustainable development.
Considered low risk, the Fund seeks to provide income and, to a lesser extent, long-term capital appreciation. Like several other FÉRIQUE Funds, it features a multi-management approach where two portfolio managers each covers a different geographic area and a diversified management style. AlphaFixe Capital manages the Canadian mandate, worth approximately 50% of the portfolio, and BMO Asset Management manages the global mandate, also worth approximately 50% of the portfolio.
Equities for sustainable development
For its part, the FÉRIQUE Global Sustainable Development Equity Fund is a globally diversified fund composed mainly of corporate equities in developed or emerging markets. The issuers must strive to uphold principles of sustainable development with their products, services or interventions.
The Fund seeks to maximize long-term return through capital appreciation and, to that end, is considered medium risk. Management of the Fund was entrusted to Impax Asset Management, which uses a process where ESG (environmental, social and governance) factors are systematically taken into account when searching for companies participating in the transition to a more sustainable global economy or well positioned to benefit from such transition to invest in.
Banking on innovation to create the future
Finally, the FÉRIQUE Global Innovation Equity Fund also focuses on the future, but by prioritizing innovative companies. Also a globally diversified fund, it mainly invests in companies striving to innovate or benefiting from innovation or trends related to it. The companies may be located in developed or emerging markets. With a medium to high risk level, the fund seeks to maximize long-term return through capital appreciation and is managed by Wellington Management Canada.
Please note that for all three funds, stocks of companies violating the UN Global Compact are excluded from the portfolio. Also, all the FÉRIQUE Portfolios invest in the Global Sustainable Development Bond Fund. FÉRIQUE’s Balanced, Growth and Aggressive Growth Portfolios also invest in the Global Sustainable Development Equity Fund and the Global Innovation Equity Fund. This diversification into new themes improves the return/risk profile of the FÉRIQUE Portfolios.
|"FÉRIQUE Funds’ long-term returns prove that, rather than impeding performance, our responsible investment approach instead serves as a lever that supports stable long-term returns while reducing volatility."|
Beyond trends, a sustainable vision of responsible investment
Creating new funds is an important event for FÉRIQUE Fund Management, as the organization rather focuses on ensuring the relevance of its existing investments vehicles instead of creating new funds in light of changing circumstances.
At FÉRIQUE Fund Management, we have always refused to create new funds based on current trends. We prefer adhering to a longterm investment philosophy with funds that meet the needs of investors and respect their risk profile in a lasting manner. For instance, the FÉRIQUE Balanced Portfolio was launched in 1980 and is still open 40 years later. Unitholders who have invested their assets in the portfolio at inception have since enjoyed an average annual return of 8.1%, which means that an initial investment of $10,000 was wor th over $226,000 on December 31, 2020. According to data from Morningstar, there are only two other funds of this type in Canada that have been active for 35 years or more, out of nearly 700 currently in operation.
By adding three new funds to our line, we have no intention to give in to what could be seen as the sustainable finance trend. However, we acknowledge that the collective issues of the future will not necessarily resemble those of the past and we choose to offer investors well thought through vehicles to reduce their exposure to the risks these challenges may pose - all the while taking advantage of opportunities as they arise.
A reflection of our business model
Our vision stems directly from FÉRIQUE Fund Management’s unique business model within the world of finance. As a non-profit organization, FÉRIQUE Fund Management’s main purpose is not to seek short-term profit for shareholders. Its status instead promotes the development of close relationships with clients, since they can become members and, as such, assert their interests and expectations at annual meetings, influence the decisions of the board of directors - and even get elected to the board - and help craft the strategic plans.
In fact, it was members who prompted FÉRIQUE Fund Management to adopt in 2006 a responsible investment policy governing voting rights and become, a few years later, a signatory of the United Nations’ Principles for Responsible Investment (PRI). Since then, responsible investment has been playing a key role in our organization and we’ve been involved mostly at three levels: exercising proxy voting rights, integrating ESG (environmental, social and governance) criteria to the analysis process and investment decisions, and ensuring shareholder engagement. Through our actions, we seek to encourage companies to adopt responsible behaviours and we require that portfolio managers we entrust with our portfolios take into account ESG criteria when selecting securities.
This process is conducted on an ongoing basis with the managers and takes the form of votes, discussions with company management and joint efforts with other stakeholders within the fund management industry. Each year, we release on our website a report outlining these initiatives and charting the progress achieved. The 2020 report will be made available shortly. We will publish another report in 2021 and in subsequent years.
|Creating new funds is an important event for FÉRIQUE Fund Management, as the organization rather focuses on ensuring the relevance of its existing investments vehicles instead of creating new funds in light of changing circumstances.|
Funds with a focus on continuity
For FÉRIQUE Fund Management, responsible investment is a matter of values - shared with those who invest in our funds - and an essential aspect of risk management, since the market is increasingly penalizing companies with sustainability and social responsibility practices based on outdated models. In fact, FÉRIQUE Funds’ long-term returns prove that, rather than impeding performance, our responsible investment approach instead serves as a lever and supports stable long-term returns while reducing volatility. Our investment horizon forces us to look forward and assess the effects - including those regarding the environment and climate change - of the practices of each organization in which we invest funds, allowing us to exert some control on this risk factor.
This approach also enables us to focus on our mission, which is to grow the assets of engineers and engineering professionals, as well as their families and businesses. By offering them three new funds expressly focused on sustainable development and innovation, we are convinced that our concrete actions will put responsible investment at the heart of everything we do.
This review has been prepared for the general information of our clients and does not constitute an offer or solicitation to buy or sell any securities, products or services and should not be construed as specific investment advice. All opinions and estimates expressed in this document are as of the time of its publication and are subject to change. The information contained in this document has been obtained from sources believed to be reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. The content of this presentation is the exclusive property of Gestion FÉRIQUE and should not be further distributed without prior consent of Gestion FÉRIQUE.