As we’ve seen in previous analyses, Socially Indexed Investing (SRI) or ESG (Environmental, Social, and Governance) follows cycles and can be as or even more profitable in the long term.
So far, this first half of 2025 has not been favorable for SRI investing.
Average positive returns but below as of June 2025
Let’s take SRI index fund portfolios (>€5,000) as an example.
We see that returns ranged from 1.6% for profile 1 to -0.2% for profile 10. In other words, the lower the risk profile, the better the portfolio’s return.
On average, SRI index fund portfolios returned 0.8%, slightly positive but 2.1 percentage points below the standard portfolios’ returns.
This is mainly explained by the fact that global SRI equity returns have been around 3 percentage points lower than global equities without any sustainability bias.
The trend for other SRI portfolios has been similar from a comparative point of view. You can check the returns of other SRI portfolios on the performance page.
Historical returns of SRI portfolios as of June 2025
Our diversified portfolios of index funds and ETFs are designed for medium- and long-term investing, and that’s the timeframe in which they should be primarily assessed.
In the following chart, we compare all SRI portfolio profiles with the different categories of Inverco investment fund statistics in Spain, from 2017 to the end of June 2025. This allows us to compare our portfolios with funds that cover the same asset classes and have a similar risk profile.
Keep in mind that Inverco statistics do not include specific SRI data and, therefore, are not fully comparable.
Since our inception, cumulative returns have ranged from 18.1% for profile 1 to 90.8% for profile 10.
On average, our SRI portfolios achieved a historical cumulative return of 46.6%, compared to the average weighted return according to Inverco of 19.9%, representing a 26.7 percentage point advantage in favor of our portfolios.
The next chart shows how our SRI portfolios have achieved an average historical annualized return (APR) of 4.4%, which is double the average of investment funds in Spain (2.2%), representing a 2.2 percentage point differential.
It’s worth noting that for each risk profile, the returns are above their respective benchmark index, as shown in green for each group. This means that both low-risk and high-risk portfolios outperform the average of their comparable investment funds.
Where most of our investors are concentrated, in profiles 6 to 9, the APR differential is 4.1 percentage points.
As of June 2025, the average APR of SRI portfolios (4.4%) is slightly below the average APR of standard portfolios (4.9%), which is a difference of 0.5 percentage points.
SRI investing follows cycles, and choosing it is a matter of personal values
Each time we review the long-term performance of SRI index investing compared to non-biased indexing, we observe that SRI yields similar results over the long term but with cycles where it underperforms (as lately) or outperforms (in other periods).
The choice of a sustainable portfolio should be based on personal values or preferences, since its performance may be lower during certain periods. If an investor is not willing to accept these annual differences, it suggests their commitment to sustainable investing is not strong enough to endure them.
On the other hand, switching strategies year to year is usually one of the worst decisions. As we’ve seen, there are cycles where one approach outperforms the other, and abandoning after a bad year may lead to missing the rebound that often follows, further worsening the final outcome.
