When Inspire Investing saw the post I did on socially-responsible investing from a biblical perspective, they asked if I’d consider having them evaluate our retirement investments to see how ‘dirty’ they are.
Sure, why not. This time, ‘knowledge is power’ wins out over ‘ignorance is bliss.’
So I submit our retirement holdings and allocations, then, a few days later, jump on a video conference with Jared Williams, an Inspire financial advisor.
He has lots of bad news. Our retirement portfolio is jammed with sketchy investments:
My obvious first question: “Define dirty.”
Jared says it’s a combination of a number of factors:
- Entertainment (e.g. dodgy movies)
- Lifestyle (e.g. homosexual activism)
- Rights (e.g. human rights violations in supply chain)
He is quick to clarify two things:
First, Inspire believes in non-discrimination for gay people. It’s the promotion of the gay lifestyle and activist agenda that they find objectionable, as they don’t believe it conforms to biblical teaching. I think most Christians would agree.
Second, a company can be soiled by their philanthropic works or legislative agenda, even if their core business does not engage in a problem area.
He showed me the report on one of our holdings with the highest dirt factor – 75.9%!
For further insight, he showed me detail within one of the companies within this Fund:
Here’s how Pfizer scores so poorly on Abortion:
- They manufacture abortifacients, which prevent the fertilized egg from being implanted, or by causing a premature delivery. This is distinguished from a traditional contraceptive, like a condom or ‘the pill.’
- They perform scientific experimentation using tissue taken from human fetuses where the embryo is destroyed during stem cell harvesting.
Pfizer also scores poorly on Lifestyle because they promote, sponsor, and contribute to gay activism. For example, Pfizer donated in 2016 and 2017 to Gay, Lesbian and Straight Education Network, a “leading national education organization focused on encouraging minor children into a LGBT lifestyle with a safe, inclusive, and affirming classroom.”
Performance is King
“That’s interesting,” you say, “but how would my investments perform if I went the Oxi Clean route?”
I hear you. I can earnestly tell you all day long that I’m willing to pay more for a product that is made in USA, or not made by child slaves, or didn’t cause a rain forest to be leveled, but when I’m putting things in my shopping cart, those values don’t register nearly as much as price. The deals are what make the cut. The almighty dollar rules.
Inspire knows this too, so they ran a hypothetical backtest to compare our actual performance to their recommended allocation:
Given the financial crisis and Great Recession that started in 2008, the 9.08% annualized return of the proposed investments since October 2007 is pretty remarkable. Of course, backtesting using hypotheticals is subject to cherry-picking, but Jared assured me that Inspire didn’t game the numbers.
I checked the S&P 500 during the same period, and assuming dividend reinvestment and inflation adjustment, the index saw a 6.92% annualized return.
We saw only a 5.78% annualized return on our actual investments during the period. 🙁 I queried Jared why that might be, but he hadn’t looked into it and wasn’t prepared to discuss it. Must have been due to our investment allocation, he mused.
It doesn’t help that our current fee structure is a bit north of what Inspire says the funds they recommend charge:
This expense differential might seem small, but it adds up. Assuming retirement savings of $350,000, the difference amounts to $630 in one year, and over $25,000 in 20 years, assuming no contributions or withdrawals.
What should we do? Stay put and make tweaks? Move over to Inspire? A 3rd option?