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June 28, 2021

Sustainable Investing at Cumberland

Almost without exception, our clients’ primary objective is to produce positive, tangible outcomes, such as growing and preserving their wealth over generations, or stewarding the assets of a charitable foundation or non-profit organization. However, in recent years, a secondary objective has been prioritized: investing in a manner that is sustainable for our planet and its people for the decades that lie ahead.


At Cumberland, we are pleased to share that our proprietary investment process delivers on both of these sets of important objectives. Our range of investment strategies have produced attractive risk-adjusted returns through decades of positive and negative market cycles, while also scoring well in terms of environmental, social and governance (ESG) sustainability measures.

A record of sustainable performance

Based on data derived from Sustainalytics, a recognized leader in sustainability research, the six core investment strategies managed by Cumberland Private Wealth Management scored higher than their respective benchmark indexes in terms of ESG as of the first quarter (Q1) of 2021, Sustainalytics’ absolute and relative ESG scoring*.

Below is a summary of the results of Q1 2021 ESG Relative Scores of Cumberland’s core investment strategies vs. their respective benchmarks, which are well above these proxies.

Sustainalytics ESG Aggregate Percentile Rank Scores
Cumberland’s Portfolio Strategy vs. its Benchmark – At March 31, 2021

For example, over roughly five years since June 30, 2016, our North American Plus International Equity strategy scored favourably relative to its Benchmark Index as can be seen in the chart below.

High 5 Year ESG Score*
North American + International (NAPI) Equity Strategy vs. Benchmark*
June 30, 2016 to March 31, 2021*

Measuring our performance relative to each strategy’s respective index provides valuable context: comparing risk and return, validating the contribution of our active management and proprietary, disciplined investment process, and benchmarking the sustainability of our portfolios.


At the same time, we remain highly aware of the risks intrinsic to indexes, including stock and sector over-concentrations and valuation bubbles. Ultimately, our North Star is measured in absolute return terms, premised on whether we manage our various portfolios’ risk adequately and capture growth in a manner that achieves our clients’ investment objectives for the long term.

Investing in sustainable companies

What makes our strategies more sustainable than the broader global investing universes or indices? The short answer is the high quality of the companies in which we invest, resulting from our proprietary investment
process and disciplined approach.

Today’s business leaders operate in an environment that is more competitive and transparent than at any time in history. These leaders are held accountable by the evolving expectations of shareholders globally, the scrutiny of regulators, employees and customers, as well as a growing class of stakeholders that can include everyone from activists and whistleblowers to citizen journalists and Twitter pundits.

In this environment, sustained success demands extraordinary vision, experience and discipline. At Cumberland, we screen thousands of public companies every year based on a process that has been honed over decades. We study numerous qualitative and quantitative factors to identify companies that have achieved a clear advantage over an extended period of time.

Qualitative and quantitative factors we study and prioritize

QualitativeQuantitative
Leadership track recordReturn on invested capital
Business modelReturn on equity
Competitive moatReturn on assets
Secular tailwindsFree cash flow

The result is a diversified portfolio of some of the best managed companies in the world. Their leadership teams understand more than just how to make money. They are attuned to their stakeholders, they take a forward-looking stance and they are strategic in their approach to business as a force for good. Many are industry leaders in terms of sustainability who tackle material issues head-on, so it should come as no surprise that they score highly on ESG measures.

Positioned for a sustainable future

Our investment process has served our clients well over more than two decades since Cumberland was founded. From our top-down asset allocation strategies to our bottom-up security selection, our portfolios are built for the long term.

While specific ESG policies and set criteria have not been integrated into our investment process at this time, we invest in portfolios of carefully selected companies with strong, forward looking leadership teams and track records of performance as we described earlier – and in charting the past several years of ESG data, we are proud to see that our investment strategies have grown steadily more sustainable. We expect this trend to persist as we, among other investors around the world, keep harnessing these forces. We believe our clients will remain well-positioned to participate and benefit from investing in a more sustainable future.

*Notes:
Portfolio and proxy benchmark ESG Scores are sourced through Bloomberg from Sustainalytics. The underlying security ESG scores are percentile rank within the relevant peer group defined by Sustainalytics. An issuer having a score closer to the 99th percentile is better than a company having a score closer to the 1st percentile. Data is provided at monthly intervals. The overall portfolio and proxy benchmark score is the aggregate asset-weighted average of the underlying scores for each holding.
Absolute ESG scores use the Morningstar Portfolio Sustainability Scores that are the aggregate asset-weighted average of the underlying Sustainalytics ESG Risk Rating as supplied on Morningstar Direct.
Cumberland’s Global Equity strategy includes the holdings of the Cumberland Global Equity Fund. The Benchmark Index is comprised of: URTH US Equity (iShares MSCI World ETF) is an exchange-traded fund incorporated in the USA. The ETF seeks to track the performance results of the MSCI World Index. ETF weights the holdings using a market capitalization methodology.
Cumberland’s International Equity strategy includes the holdings of the Cumberland International Fund. The Benchmark Index is comprised of URTH US Equity (iShares MSCI World ETF) is an exchange-traded fund incorporated in the USA. The ETF seeks to track the performance results of the MSCI World Index. ETF weights the holdings using a market capitalization methodology.
Cumberland’s US Equity strategy includes the holdings of a representative client account. The Benchmark Index is comprised of SPY US Equity (SPDR S&P 500 ETF Trust) is an exchange-traded fund incorporated in the USA. The ETF seeks to track the S&P 500 Index. The Trust consists of a portfolio representing all 500 stocks in the S&P 500 Index. It holds predominantly large-cap U.S. stocks. ETF weights the holdings using a market capitalization methodology.
Cumberland’s Canadian Equity strategy includes the holdings of the Canadian Equity Fund. The Benchmark Index is comprised of XIC CN Equity (iShares Core S&P/TSX Capped Composite Index ETF) is an exchange-traded fund incorporated in Canada. The Fund invests in shares of the companies that make up the S&P/TSX Capped Composite Index in the same proportion as they are reflected in the index. ETF weights the holdings using a market capitalization methodology.
Cumberland’s North American strategy includes the holdings of the Cumberland Capital Appreciation Fund. The Benchmark Index uses a weighted average: 50% of the holdings in the SPDR S&P 500 ETF Trust and 50% of the iShares Core S&P/TSX.
Cumberland’s NAPI strategy utilizes a Composite ESG score with fixed weights of 80% Capital Appreciation Fund (North American Equities) and 20% International Fund. The Benchmark Index uses a weighted average: 40% of the weights of the holdings in the SPDR S&P 500 ETF Trust, 40% of the weights of the holdings in the iShares Core S&P/TSX Capped Composite Index ETF, and 20% of the weights of the holdings in the iShares MSCI EAFE ETF