Inhance Growth SRI Portfolio Commentary
Portfolio Advisor: Vancity Investment Management Ltd.
Fund Commentary - March 31, 2012
Over the quarter, the Portfolio Sub-Advisor engaged with several
companies on diversity, human rights, project risk and climate
change. They met with Teck Resources to discuss actions and
policies to promote gender diversification in the workplace. Teck
provided an overview of initiatives at company operations,
demonstrating in-depth knowledge on the benefits of diversity and
committed to provide increased reporting in the annual
sustainability report. The Portfolio Sub-Advisor filed a
shareholder resolution with Agrium calling on the board tor review
and report on policies and initiatives promoting diversity in the
workforce. Agrium agreed to increase reporting on progress on
diversity, including success stories and new initiatives. They also
engaged with Valener on the need to disclose information on the
company's approach to addressing climate risks. The company agreed
to provide more information through disclosure by Gaz Metro, the
primary asset held by Valener. The Portfolio Sub-Advisor met
with IAMGOLD to discuss human rights policies, practices and
reporting. The Company responded by providing information on
current human rights initiatives including development of a
stand-alone policy. Finally, the Portfolio Sub-Advisor jointly
filed a shareholder resolution, with two other major shareholders,
calling on the Enbridge Board of Directors to assess the risks
associated with First Nations' opposition to the Northern Gateway
Pipeline project, and detail how the company intends to mitigate
the operational, reputational, and legal risks of such opposition.
The resolution will be presented for voting at the upcoming annual
meeting of shareholders.
As the latest quarter's strength illustrates, after months of
squabbling and confusion, the absence of any negative surprises out
of Europe and the success of the ECB liquidity initiatives offered
a welcome reprieve to markets starved for some confidence-boosting
news. However, the Portfolio Sub-Advisor believes these liquidity
measures, while positive, merely mask the deeper, on-going
solvency, deleveraging and austerity issues still facing much of
Europe. While they find the modest pace of growth in the US is
encouraging, global growth remains far from booming with China's
mandated economic slowing posing risks of a "hard landing"
scenario. Furthermore, they believe potential developments
surrounding Iran, Spain, oil prices, European elections and
expectation shifts on any of the aforementioned "big picture"
variables suggest current complacency could be rudely shattered,
inducing downside volatility typical of the long work-out phase
post a major financial crisis. Thus they strongly affirm that for
growth-oriented investors, the balance of the Portfolio remains an
appropriate low-risk strategy in the current environment for
improving the overall return and mitigating inherent volatility.
The Portfolio Sub-Advisor also indicates that within the overall
equity fund content, they intend to undertake a modest shift from
the IA Clarington Inhance Canadian Equity SRI Fund to the IA
Clarington Inhance SRI Global Fund, while leaving the IA Clarington
Inhance Monthly Income SRI Fund intact. They believe that in the
prospective period of deleveraging and slower global growth, risks
of appreciation of the Canadian dollar have diminished; that the
attractiveness of non-resource stocks will rise relative to
resource stocks; and that the breadth of investment opportunity
available in other more diverse markets, particularly the US, now
offers a compelling alternative to our resource-heavy Canadian
market. Hence, they believe this shift to be both prudent and the
most appropriate and attractive strategy for mitigating the
inherent volatility in the present slow growth and less predictable
world economic environment.