Ep 393: Does ethical investing generate better or worse returns?

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In this episode, Stuart takes an evidence-based look at ethical, ESG, and sustainable investing, cutting through the marketing to focus on what really matters: risk, diversification, and expected returns. We explain the critical differences between ethical exclusions, ESG frameworks, and sustainability themes and why confusion between them often leads to poor portfolio decisions.

Stuart also explores why there’s no universal definition of “ethical”, how that affects fund construction, and why two funds with similar labels can behave very differently. You’ll hear why staying close to the parent index matters, how ethical overlays can unintentionally increase concentration risk, and where ethical investing can clash with factor, value, and geographic tilts.

Finally, he examines the real-world performance data, discusses whether ethical companies may attract more capital over time, and outlines a practical way to invest ethically without abandoning disciplined, evidence-based portfolio construction.

If you want to invest responsibly and intelligently without sacrificing long-term returns, this episode will help you think more clearly about the trade-offs involved.

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This podcast provides general information about finance, tax and credit. It doesn't take into account your specific objectives, financial situation or needs, so you need to assess whether it's relevant to your circumstances before acting on it. If you're not sure, speak to a licensed, trustworthy professional.