There is a perception that investing in such firms is necessary to generate returns
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There is a perception that investing in fossil fuel firms is necessary to generate returns, but a new report from Genus Capital has revealed the opposite.
The study noted that investors who have ditched their fossil fuel investments did not sacrifice any gains and actually achieved even more robust returns.
The study, based on the group's four-year investment data, found that the returns of its Fossil Free CanGlobe Equity Fund outperformed its benchmark and the overall Canadian stock market index. It is important to note that these two benchmarks include coal and major carbon producing industries.
The report acknowledges the challenges that may arise from divesting fossil fuel stocks, since extractors, transmitters, and emitters of fossil fuels make up around 30% of the value of the Canadian stock market.
For their part, the group's equity funds combined Canadian and global stocks into a single strategy that emphasized top industries in each region. This helps fill the energy gaps with robust firms in other economically sensitive sectors with the potential to achieve energy sector-like stock price exposure.
This is apparent with the funds' performance relative to its benchmark since its inception in 2013. To recall, the group established the fund after encouragement from the David Suzuki Foundation.
"Having the data to show that not only is divesting good for the planet ― it also generates better returns, is huge,” said David Suzuki Foundation CEO Andrea Seale. “We hope other organizations, and indeed investors, will follow suit and join this movement."
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The study noted that investors who have ditched their fossil fuel investments did not sacrifice any gains and actually achieved even more robust returns.
The study, based on the group's four-year investment data, found that the returns of its Fossil Free CanGlobe Equity Fund outperformed its benchmark and the overall Canadian stock market index. It is important to note that these two benchmarks include coal and major carbon producing industries.
The report acknowledges the challenges that may arise from divesting fossil fuel stocks, since extractors, transmitters, and emitters of fossil fuels make up around 30% of the value of the Canadian stock market.
For their part, the group's equity funds combined Canadian and global stocks into a single strategy that emphasized top industries in each region. This helps fill the energy gaps with robust firms in other economically sensitive sectors with the potential to achieve energy sector-like stock price exposure.
This is apparent with the funds' performance relative to its benchmark since its inception in 2013. To recall, the group established the fund after encouragement from the David Suzuki Foundation.
"Having the data to show that not only is divesting good for the planet ― it also generates better returns, is huge,” said David Suzuki Foundation CEO Andrea Seale. “We hope other organizations, and indeed investors, will follow suit and join this movement."
For more of Wealth Professional's latest industry news, click here.
Related stories:
Mackenzie rolls out responsible, sustainable funds
Why are advisors ignoring client demand?
