Toronto-based robo-advisor firm Wealthsimple Financial Inc. is launching socially responsible investment (SRI) portfolios whose management fees will be slightly higher than those of the firm’s other investment products.
The launch of the portfolios is a response to a dramatic increase in the number of clients looking to align their personal values with their investments, according to an announcement released Thursday.
“SRI has grown tenfold over the past 20 years — there are now $22 trillion in assets worldwide in SRI funds. In Canada alone, SRI accounts for 20% of all financial assets,” the announcement states.
Wealthsimple’s SRI portfolio includes a diversified investment strategy and is available for various levels of risk tolerance. The selected ETFs focus on low carbon emissions, advanced “clean technology” innovation and sustainable growth in emerging markets.
The portfolios include investments in the iShares MSCI ACWI Low Carbon Target ETF and iShares Jantzi Social Index ETF; Vident International Equity Fund; PowerShares Cleantech Portfolio; and BMO Mid Federal Bond Index ETF.
Wealthsimple will retain its current management fees, ranging from 0.35% to 0.5%, for the SRI portfolios. Fees charged by the firms that manage the exchange-traded funds (ETFS) within the SRI portfolios will be slightly higher than the third-party management fees charged for non-SRI ETFs.
Those third-party firms’ fees for the SRI portfolios have a weighted average of 0.25% to 0.4%, compared with 0.2% to 0.3% for regular Wealthsimple portfolios.
“There is, however, a good reason for the fee difference,” Wealthsimple states on its website. “Someone smart needs to screen for the most socially responsible companies by going through reams of data and designing cutting-edge analysis tools. And smart people usually don’t work for free.”
Says Michael Katchen, CEO and founder of Wealthsimple, in a statement: “We’re committed to providing innovative investing solutions to our clients, including socially responsible options. We’re thrilled to help Canadians feel good about their investments morally, as well as financially.”
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