Ethical screening removes a significant proportion of the S&P 500 from consideration. That means our portfolios will naturally behave differently from mainstream markets — month to month, and sometimes year to year.
This is neither good nor bad. It’s the deal.
The clearest way to think about it: if you compare notes with a friend invested in a standard index fund, your returns will rarely match theirs. Some periods you’ll lead. Some periods you’ll trail. The divergence is a direct consequence of the screening — not a sign something has gone wrong.
Why We Think That’s Worth It
Ethical screening functions as a research filter, not just a moral one. By narrowing the investable universe to companies we can research deeply and intend to own indefinitely, we’re building portfolios for long-term ownership — not benchmark-tracking.
A universe that excludes weapons manufacturers and fossil fuel extractors is also a universe less exposed to regulatory risk, stranded assets, and activist short-sellers. The ethical and the financial case overlap more than the industry acknowledges.
If the Divergence Feels Like Too Much
We can adjust exposure. Blending in our Diversification strategy — screened funds with broader market coverage — pulls the portfolio closer to conventional market behavior. It’s the right move for clients who want ethical alignment but also performance that moves similarly to the broader market.
Investment strategies involve risk of loss. Past performance does not guarantee future results. Ethical screening will produce sector exposures that differ from unscreened strategies — affecting performance in both directions.