RBC to jump into responsible investing

It may be just another new mutual fund family in the already crowded Canadian market, but for the responsible investing community, it’s a historic moment. On Monday, RBC, Canada’s biggest bank, filed a preliminary prospectus for three new SRI funds, co-branded with Jantzi Research.

The surprise announcement came Monday at the opening session of the Social Investment Organization’s biennial conference in Montreal. RBC-Jantzi is launching a Canadian equity, balanced and global SRI fund, according to Michael Jantzi, head of Toronto-based Jantzi Research.

“Things have changed in the last year,” Jantzi said, noting that SRI has become significantly more mainstream, a point emphasized by other members speaking at today’s panel, called “The Landscape of SRI in Canada and Around the World.”

“I loathe the term ‘paradigm shift’ and I’m beginning to loathe the term ‘tipping point’ because I hear it all the time, but the fact is, there has been a tipping point,” Jantzi said.

“RBC has been tracking our industry for a long time,” he added. “They believe a tipping point has been reached and now is the opportunity to come into the market. This is good for the industry as a whole and it verifies that we are on right track.”

RBC has consistently been one of the top fund sellers in Canada in recent years, with new fund sales frequently topping $500 million per month.

RBC has confirmed it has filed the preliminary prospectus, but has declined further comment until regulators issue an official receipt.

“It opens a channel that has never been open before, to sell these funds through the RBC branch network,” Jantzi said. However, he admits that the SRI industry is headed into uncharted territory, considering RBC is the first of the big banks to make the move. “We have to seize the opportunity, there’s a lot of hard work to be done still but believe this will be successful.”

Although sales of responsible investing products have jumped dramatically over the past few years, retail sales have still been relatively soft. Monday’s announcement could change that equation.

“We are very pleased and we believe this is a recognition of what we’ve been saying all along, that there’s a lot of interest by Canadians in this market,” said Eugene Ellmen executive director of the Social Investment Organization, who also predicts that other banks could soon follow RBC’s lead. “We expect that this will not be the last announcement. If one bank comes in, the others will recognize that they have to be there too.”

Jantzi concurs. “We have had conversations with each of the banks over the years and I think it’s fair to say that their interest is more now that it has at any time that I’ve been involved in this industry in the past 17 years,” he said. “From a competitive standpoint, this is one more thing [the banks] are going to have to factor into their business planning.”

Even competing SRI fund companies were praising today’s development. “As a relatively new mutual fund company, we think it’s great, we think it’s going to be our job that much easier,” said Dermot Foley of Vancouver-based Inhance.

“I’m very happy, I think this is phenomenal,” said Gary Hawton, president of Cambridge, Ont-based Meritas. “I think it validates SRI. There are more advisors and more investors who are interested. And I think it’s going to put independent advisors on notice that this is a growing market and a growing area of interest for their investors and they will need to find an SRI fund family to put on to their shelf.”

The new RBC-Jantzi funds are expected to be for sale early in July, pending approval by the various securities commissions.

Doug Watt is a Toronto-based writer/editor.

(05/28/07)