, doesn't feel constrained by the socially responsible investing (SRI) mandate.
"We don't start with a prescribed list of already evaluated SRI names," says McClure, a vice-president, portfolio manager and research director in Toronto with I.G. Investment Management Ltd. "I think that would preclude us from getting great names in the portfolio that maybe other people haven't looked at." Rather, McClure and his colleagues start by running through their standard investment process, and only later start asking the SRI questions. McClure has been co-managing Canada's largest single SRI fund, which formerly had the slightly shorter name of Investors Summa, since March 2003.
Along with in-house analysis, he draws on third party research such as the Jantzi Social Index. This index is maintained by Jantzi Research Inc., the independent Toronto firm headed by Michael Jantzi, which specializes in SRI research. Specifically excluded from the fund, under Investors Group's self-imposed constraints for funds in its SRI product line, are companies whose primary business is 5% or more in alcoholic beverages, tobacco, gambling, pornography or armaments.
As a growth-style manager, McClure defines growth as anything that's growing at twice the rate of the gross domestic product (GDP). If in a good year GDP is nominally 4%, he says, " I want to be invested in companies that are growing their top line (revenue) 8% to 20% or even better."
McClure says the I.G. team draws on its expertise in classic growth sectors such as consumer discretionary, technology, health care and financial services, and their research also seeks to identify innovative companies. For instance, during the resources boom, it pushed them into the whole area of alternative energy and pollution initiatives. "And I think those themes have some secular legs to them," McClure adds.
Over the past year and a half, investments in the alternative energy space have taken the fund to Europe and Asia and some of the emerging markets. The foreign content mandate is a maximum of 50% but the fund usually runs between 15% and 25%. About half of those holdings have generally been in U.S. companies.
Along with Investors Summa SRI, McClure and co-manager Keith McLean also co-manageInvestors Canadian Growth. McClure has been the sole manager ofInvestors Global Science and Technology since Dec. 31, 2006. Most recently, he took on the role of managingInvestors Summa Global Environment Leaders, launched in November 2007.
McClure, 39, considers his experience in the technology field a key strength. He graduated from Queen's University in applied science in electrical engineering in 1991. During his university years, he worked as a test engineer at IBM in an internship program.
Joining Hewlett Packard in 1992, McClure worked in large account sales, and then pursued further studies. In 1997, he graduated with an MBA from the Richard Ivey School of Business at the University of Western Ontario.
After a stint with HP in California's Silicon Valley as a software product manager, McClure entered the financial field. From 1997 to 1999, he was an investment banker in Toronto. That experience "ramped me quite quickly in financial modeling and accounting," he says.
McClure worked for a short period with Morgan Stanley on Wall Street before returning to Canada, where he joined Sceptre Investment Counsel Ltd. in Toronto as an analyst. He moved to I.G. in October 2000, and is currently responsible for about $2.5 billion in assets.
The Investors Summa SRI portfolio of 40 to 70 names consists mostly of top-quality, large-capitalization companies. It has exposure to at least seven of the 10 global sectors, including resources industries. The fund's recent top 10 holdings, for instance, include oil and gas company EnCana Corp. ( ECA/TSX) and gold miner Goldcorp Inc. ( G/TSX).
Generally, individual stock positions won't exceed 4% of fund assets, and will get trimmed if they reach 6% or 7%. The top 15 names tend to represent 40% to 60% of the portfolio. Cash levels are usually kept at 5% or less.
The fund's top holding is the BlackBerry mobile device maker Research in Motion Ltd. ( RIM/TSX), a prime example of an industry leader. Although it is a very volatile name, says McClure, in the long term the team has made the right call by owning it.
Portfolio turnover varies, and will depend on the volatility of industry sectors and whether the managers are reaching their price targets. "But generally," says McClure, "we look for companies that we can take longer positions in and then trade around a core position to try and enhance returns."
Under McClure's tenure, Investors Summa SRI has been a second-quartile performer over the past three years ended Jan. 31, returning a compound annual 8.9%, versus 8.1% for the median Canadian Focused Equity mutual fund.
Over any period, Investors Summa faces a higher fee hurdle than most of its peers. For instance, the management expense ratio for Series A is 2.69%, compared with 2.44% for the median fund.
Echoing his employer's view on fund fees, McClure characterizes the MER as an "all-in-one" fee that bundles in the cost of financial planning services provided by Investors Group consultants. "It's something that everybody in the industry is scrutinizing," he says, "but we also need to say, what are you getting for your money?"
