At the beginning of February, we published an analysis explaining why SRI portfolios had underperformed in 2025. We explained that this was neither an error nor an anomaly, but rather the natural result of applying different investment criteria within the same risk framework, and that SRI investing goes through favourable and unfavourable market cycles that may reverse over time.

The first half of 2026 points precisely in this direction: SRI index portfolios have tended to recover and have generally outperformed standard portfolios so far this year.

SRI portfolios outperform standard portfolios in the first half of 2026

Our portfolios delivered exceptional returns as of the end of June 2026.

SRI portfolios also performed in line with this trend.

If we compare our standard and SRI index fund portfolios by profile, as of the end of June 2026, the SRI version achieved higher returns across all profiles—by around 1 percentage point in most portfolios.

For the average investor profile (profile 7/10), the SRI portfolio has returned +9.2% in 2026, compared with +7.9% for the standard portfolio: a difference of +1.3 percentage points in favour of SRI.

The average across all profiles (1 to 10) is also 1.1 percentage points higher.

The cumulative gap has also tended to narrow

At inbestMe, we focus more closely on the medium and long term.

If we take profile 7 as a reference for both portfolios, the metrics after the first half of the year have also tended to converge, as shown in the following table:

Three conclusions can be drawn from these metrics:

• The cumulative gap since inception has narrowed: from around 9 percentage points at the end of 2025 (0.6% annualised) to around 7.6 points at the end of June 2026 (0.4% annualised).
• Over 12 months, the two portfolios are almost level (15.3% compared with 15.5%), while over three years the standard portfolio still maintains an advantage. The recovery is recent and does not immediately erase the gap accumulated in 2024 and 2025.
• Volatility and maximum drawdown remain very similar. The difference in returns does not result from taking on more risk, but from the performance of the underlying assets.

The recovery is not limited to index fund portfolios: the same pattern can be seen in pension plans. The SRI version has outperformed the standard version across all profiles so far in 2026 (profile 7: +9.2% compared with +8.2%; average across all profiles: +6.7% compared with +6.0%). However, as with the other portfolios, the standard version still maintains an advantage in cumulative returns since inception (90.1% compared with 81.3% for profile 7).

Mean reversion in action

As we explained in February, SRI portfolios apply environmental, social and governance (ESG) filters that introduce structural sector biases. They exclude controversial sectors and the worst-performing companies within each sector while increasing exposure to companies with better sustainability practices.

In 2024 and 2025, these biases held back SRI portfolios because several excluded or underweighted sectors led the markets. In the first half of 2026, the cycle shifted and those same biases worked in their favour. This is a textbook example of the well-known phenomenon of mean reversion: switching from an SRI portfolio to a standard portfolio after several unfavourable years often makes little sense, as it may mean locking in relative underperformance just before the trend reverses, as has now started to happen.

The underlying message remains unchanged

The fact that SRI portfolios performed better during this half-year should not lead to the opposite conclusion from 2025: neither did their recent underperformance justify abandoning them, nor does their current strong performance guarantee that they will consistently outperform standard portfolios.

SRI investors should continue to keep two things in mind:

• Accept the trade-off. Investing according to SRI criteria is both a financial decision and a values-based one. Returns may be lower during certain market cycles and higher during others, as they have been this half-year.
• Remain consistent with your values. If the sole objective is to maximise expected returns, the standard portfolio is the natural benchmark. If how and where the money is invested also matters, SRI portfolios remain a fully valid option.

Choosing an SRI portfolio should be linked first and foremost to our values, rather than to the expectation of achieving higher returns.

The first half of 2026 simply reminds us that patience and consistency with the chosen strategy are ultimately rewarded over the course of market cycles.