BRI Historical Returns: Comparable–or Better
The most important reason for Biblically Responsible Investing is to honor God by aligning the fund holders’ values with their investments. But a considerable body of research indicates that investors do not have to hurt their bottom lines while doing so and may even reap higher returns in some cases.
A 2016 study at the University of Pennsylvania’s Wharton School of Business found that screened investments performed favorably against unscreened investment funds: “Impact funds in the sample that seek market-rate-returns demonstrate that they can achieve results comparable to market indices, while still reporting mission preservation in the vast majority of their exited investments.” 1
The study, “Great Expectations: Mission Preservation and Financial Performance in Impact Investing,” posited that “Market-rate-seeking impact investments in the sample, therefore, may be financially competitive on a gross basis with other equity investing investment opportunities. This financial performance may be why impact fund managers often assert that there is little inherent tension between profits and purpose.” 2
A 2014 meta-analysis of 85 studies and 190 experiments reported in Business Ethics: A European Review found that “consideration of corporate social responsibility in stock market portfolios is neither a weakness nor a strength compared with conventional investments.” 3
However, an Oxford University 18-year study of screened funds comprising 180 U.S. companies for “sustainability” and other factors such as excluding firms that employed child labor, showed better returns, including lower cost of capital and “stock price performance.” 4 The authors compiled evidence “that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of the stock market as well as accounting.” 5
In 2015, a Christian Investment Forum study noted that previous studies had established that Socially Responsible Investing, of which BRI is a subcategory, performed as well or better than unscreened funds.
In an effort to determine whether the smaller universe of BRI funds matched the overall SRI finding, the authors concluded that, “Based on the analysis of historical performance data from the funds managed by members of the Christian Investment Forum [of which Timothy Plan is a participant], the results did, in fact, corroborate the expectation that return performance was not reduced due to incorporating BRI, and in fact there was a general outperformance compared to the industry averages. 6
“Over the last five years, a composite of the returns from all of the equity mutual funds within the Christian Investment Forum outperformed the industry average by 77 basis points (bp) on an annualized basis.” 7
The author cautioned that “the results of this analysis are not meant to suggest that BRI funds will result in outperformance. The most important reason to incorporate BRI funds into an overall investment portfolio is to better align investments with an investor’s values.” 8
But investors and advisors can have peace of mind that “considering funds that can align with their Christian faith need not be a choice between values and performance.” 9
Before investing, consider Each funds’ investment objectives, risks, charges and expenses. a prospectus containing this information is available through your Financial Advisor or funds’ website. Please read it carefully.
1 Jacob Gray, et al, “Great Expectations: Mission Preservation and Financial Performance in Impact Investing,” Wharton School of Business, University of Pennsylvania, p. 28, at: www.socialimpact.wharton.upenn.edu/wp-content/uploads/2016/09/Great-Expectations-Mission-Preservation-and-Financial-Performance-in-Impact-Investing.pdf.
2 Ibid, p. 27.
3 Christophe Revelli and Jean-Laurent Viviani, “Financial performance of socially responsible investing (SRI): what have we learned? A meta-analysis,” Business Ethics: A European Review, Vol. 24, Issue 2, April 2015, p 158, at: www.onlinelibrary.wiley.com/doi/10.1111/beer.12076/abstract.
4 Robert G. Eccles, Ioannis Ioannou, and George Serafeim, “The Impact of Corporate Sustainability on Organizational Processes and Performance,” Smith School of Enterprise and the Environment, Oxford University, 2010, at: www.hbs.edu/faculty/Publication%20Files/SSRN-id1964011_6791edac-7daa-4603-a220-4a0c6c7a3f7a.pdf.
5 Ibid, p. 1.
6 John Silverling, “A Research Study on CIF Member Funds Composite Performance Relative to Industry Averages,” Christian Investment Forum White Paper, May 2015, p. 2, at: www.christianinvestmentforum.org/content/uploads/2015/06/CIF-Study-on-BRI-Funds-Performance-Spring-2015.pdf.
7 Ibid, p. 2.
8 Ibid, p. 3.
YOUR CHOICES COUNT: THE CASE FOR BIBLICALLY RESPONSIBLE INVESTING
Article 1 – A Brief History of Socially Responsible Investing
Article 2 – God’s Financial Advice
Article 3 – Biblically Responsible Finance from 1976 to the Present
Article 4 – Moral Investing – A Growing Field
Article 5 – BRI Historical Returns: Comparable–or Better
Article 6 – Impacting the Kingdom.
A writer for Timothy Partners, Ltd. He is a regular weekly columnist for The Washington Times and Townhall.com and is frequently published by AmericanThinker.com, DailyCaller.com, OneNewsNow.com, and others. He has authored the following books: “A Strong Constitution: What Would America Look Like If We Followed the Law” (D. James Kennedy Ministries, 2018), Invested with Purpose: The Birth of the Biblically-Responsible Investment Movement, and A Nation Worth Fighting For: 10 Steps to Restore Freedom.