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 demonstrated better Corporate Sustainability Scores than their respective benchmark indexes. Note that a lower numerical score represents less ESG risk. Below is a comparison of the Q2 2022 data.
Portfolio Strategies vs. Benchmark ESG Risk Rating
At June 30, 2022
A Lower Numerical Score is less ESG Risk
Investing in sustainable companies
What makes our strategies more sustainable than the broader global investing 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
|Leadership track record||Return on invested capital|
|Business model||Return on equity|
|Competitive moat||Return on assets|
|Secular tailwinds||Free 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 criteria.
Positioned for a sustainable future
Our investment process has served our clients well over the 25 years 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 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.
Reflecting on the historic 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.
Portfolio and benchmark scores are sourced through Morningstar Direct. The Morningstar Portfolio Corporate Sustainability Score is an asset-weighted average of Sustainalytics’ company-level ESG Risk Score. The Sustainalytics’ company-level ESG Risk Score measures the degree to which a company’s economic value may be at risk driven by ESG factors. Like the ESG Risk Scores, the Portfolio Corporate Sustainability Score is rendered on a 0-100 scale, where lower scores are better, using an asset-weighted average of all covered securities. Morningstar determines whether each eligible portfolio holding can be classified under the corporate or sovereign framework. Each holding can only contribute an ESG Risk Score or a Country Risk score, not both. To receive a Corporate Sustainability Score, at least 67% of a portfolio’s corporate assets under management (long positions only) must have a company ESG Risk Rating. Portfolio scores reflect an aggregation net of cash and cash equivalents.
The portfolio score is the weighted average of the underlying scores of the holdings in the Cumberland Capital Appreciation Fund.
Benchmark score is the weighted average of the underlying securities comprising the S&P/TSX Composite Index and S&P 500 Index, weighted 50% each (Morningstar SecId XIUSA04GA4 and XIUSA04GSY).
The portfolio score is the weighted average of the underlying scores of the holdings in the Cumberland Canadian Equity Fund. Benchmark score is the weighted average of the underlying securities comprising the S&P/TSX Composite Index (Morningstar SecId XIUSA04GA4)
The portfolio score is the weighted average of the underlying scores of the holdings in a representative account. Benchmark score is the weighted average of the underlying securities comprising the S&P 500 Index.(Morningstar SecId XIUSA04GSY)
The portfolio score is the weighted average of the underlying scores of the holdings in the Cumberland Global Fund. Benchmark score is the weighted average of the underlying securities comprising the Morningstar Developed Markets Target Market Exposure Index (Morningstar SecId F0000139Y2)
The portfolio score is the weighted average of the underlying scores of the holdings in the Cumberland International Fund. Benchmark score is the weighted average of the underlying securities comprising the Morningstar Developed Markets ex-North America Target Market Exposure Index (Morningstar SecId F000013OH4)