RBC GAM moves SRI funds to Vision Funds

Responsible investments’ (RI) assets under management (AUM) in Canada continue to enjoy strong growth driven by a combination of the sector’s evolution and demographic factors, according to the 2016 Canadian Responsible Investment Trends Report from the Responsible Investment Association (RIA).

The RIA report points out that there was $1.5 trillion in AUM incorporating environmental, social and corporate governance (ESG) factors in Canada as of Dec. 31, 2015. This represents a 49% increase from $1 trillion two years earlier, while individual investors’ AUM has almost doubled (up by 91%) over that same period, to $118 billion from $62 billion. As a result of this strong growth, RI AUM represents 38% of total Canadian investment industry AUM, up from 31% as of Dec. 31, 2013.

This strong growth is attributable to several factors, the report notes, including increased engagement from investment managers, as demonstrated by the rise in Canadian investment managers that have signed on to the United Nation’s Principles for Responsible Investment (UNPRI), and a proliferation of RI-related products and services.

Moreover, there’s a growing awareness of the importance of ESG factors, the report says, thanks to research that demonstrates the link between RI and higher long-term returns as well as high-profile cases (such as the Volkswagen emissions scandal) that have proven the importance of these considerations for investors.

In addition, pension funds, which account for three quarters of the growth in RI AUM, are incorporating ESG factors increasingly into their investment decisions, the report says. The millennial generation is also much more open to ESG investing than previous generations, such as Baby Boomers.

Looking ahead, the RIA report says its survey of asset managers and investors in the autumn of 2016 found continued optimism about the RI industry’s outlook for 2017 and 2018. It reports that 80% of survey participants expect either moderate or high levels of growth over the next two years. Only 15% expect low growth; 6% expect the industry to remain flat; and no survey participants expect the industry to contract.

Among asset managers, 59% said that they are considering launching new ESG-themed products in the years ahead, the report says: “The majority of new products named by survey participants involve fossil-fuel free or low-carbon strategies.”

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